Forget Russians! A Small London Flat Will Cost $50 Million By 2050

Tyler Durden's picture

While Canada may have bitten the hand that feeds it real-estate bubble, one of London's biggest real-estate investors says that even if sanctions were imposed against the Russian oligarchs, London property prices will continue to soar. The average London "flat" could fetch GBP36 million by the middle of the century, and is therefore a bargain now, Hugh Best advises clients. His reasoning is impecable, "the average price in prime central London is now £1.5m, and has been growing at 9% a year, which we think is firmly sustainable. They have been growing at that level for 40 years and we see no reason for that to change." With two-thirds of new homes in London sold to investors, they are all driving up prices and "the Russians are only a part of it... and the Ukrainians might come with their money."

 

Via The Guardian,

You may think a shoebox-sized flat in central London costing more than £1m is an insane illustration of a property price bubble, but it could be the bargain of the century.

 

According to projections by one of the biggest investors in "prime" property in the capital, that average flat could fetch £36m by the middle of the century – if its predictions of 9%-a-year growth in prices become reality.

 

Casting aside concerns that Russian oligarchs will no longer be sheltering their billions in luxury mansions, London Central Portfolio has launched a £100m fund to buy one- and two-bed apartments in the capital's most exclusive districts.

 

...

 

Hugh Best, LCP's investment director, said: "The average price in prime central London is now £1.5m, and has been growing at 9% a year, which we think is firmly sustainable. They have been growing at that level for 40 years and we see no reason for that to change."

 

...

 

The Crimea crisis would not halt London property's inexorable rise, said Naomi Heaton, LCP's chief executive. "The Russians are only a part of the market and have been dwindling in number over the past few years … we could instead have the Ukrainians coming in with their money. London is the destination for the high net worth community of the world, and we are only just beginning to see the mainland Chinese. The loss of some Russian oligarchs is not a fundamental loss for the market."

So buy, buy, buy...

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ebworthen's picture

Yeah, sure, to the moon, nothing will ever affect property valuations (*cough*).

Looney's picture

This is beyond FUNNY!

USS Truxtun’s foremast is 198 feet, mainmast – 220 feet, but the Bosphorus Bridge’s clearance is (get this!) 210 feet!

I hope the main mast is somehow retractable or somepin’, otherwise we will look really dumb.  ;-)

Looney

 

zaphod's picture

The title of the article shouldn't be that a flat will be "worth" $50M in 2050, because that isn't a representation of its value.

The title instead should be that your money will not be worth anything by 2050 and your live savings will not be able buy a simple flat.

Scarlett's picture

Wasn't london burning the other day?  There may be no london by 2050.

pavman's picture

[t]wat ever happened to gentrification?!

Dollarmedes's picture

Go long on London hit-squad futures.

Normalcy Bias's picture

Rose glass optimists. This 'intelligent' chimp will have long exterminated itself by then...

Handful of Dust's picture

"House prices never go down,"....the mini-skirted, 5th grade teacher-turned Realtor down the block says.

Anusocracy's picture

All those million dollar flats in 1980s Tokyo are now worth billions.

Right?

DeadFred's picture

By 2050 $50,000,000 will buy about 100 pounds of pinto beans so the flat will be a steal. Unless of course the place is infested with zombies.

Graph's picture

Or....there will be no flat. Just a rubble.

TheFourthStooge-ing's picture

.

The title instead should be that your money will not be worth anything by 2050 and your live savings will not be able buy a simple flat.

True, but bread will only be eight hundred dollars a loaf, so might as well buy two.

DoChenRollingBearing's picture

And when things get even more dicey in the Middle East, that much more will flow to London.

Just like Lat Am money to Miami.

Just like Chinese money to LA, San Fran and Vancouver.

Just like Russian and other Euro money to NYC as well.

NihilistZero's picture

BY NOW OR BE PRICED OUT FOREVER!!!!!!

I cannot fucking believe they're pulling this shit again just 6 years after the bust...  Luckily the average Joe's memory isn't THAT short.  Anecdotally hearing a lot of people saying "Here comes another crash."  Glad people are starting to wake up to the Banksters games.

Wall Street/London "You will never find a more wretched hive of scum and villainy..."

jmcadg's picture

Also, luckily the Average Joe is fuckin' broke.

There are only so many banksters able to afford this shit - and they are getting thin on the ground (or is that flat!)

Mentaliusanything's picture

Oh that was " Fun from high"

Why = X 2...... so fubar Hugh

NihilistZero's picture

There are only so many banksters able to afford this shit...

And there in lies the rub.  The FED knows the only way tokeep the economy from seizing up is to put $$$ back in the hands of consumers, they just won't say it.  However look at their actions.  The taper goes on (with whatever excuse or magic metric is needed to justify it).  The have all but gauranteed a rate rise in 2015.  Until you get housing back down to a manigable percentage of income the proles can't spend.  That's why Staples, Radio Shack, etc. are all fucked.  The FED used the last 5 years to save their member banks from nationalization.  Mission accomplished.  Now they are going to let others (taxpayers and specuvestors) take the 5-Year-Delayed losses from Housing Bubble 1.0.  Can't wait to see those stupid enough to invest in Rental Backed Securities and REITs take their losses as the FED shrugs it's shoulders.  As long as BofA, Chase, Citi and Wells are okay and the dollar is still reserve they could give fuck all.  As long as those 5 interests are served the FED has fullfilled it's REAL charter.

pavman's picture

I'd say 90% of this board have been waiting for part duex for like 6 years ... its coming... 1929 bitchez.  Die bart die.  The bart the.  Ok time to pet the donkey...

Actually, REITs are doing quite well right now.  I sold all mine when I saw they had shit returns last yar.  Gee *now* they're up like 9%.  At least in my 401k.  Nucker Futzin.

Blankenstein's picture

 

Things weren't looking so good in the Summer of 2012, then Ben helicopters in and starts an unprecedented printing spree (before the elections) of $40 billion per month upping it to $85 billion in December.  Why such a drastic intervention if things are so hunky-dory?

 

Kirk2NCC1701's picture

They'll "cross" that bridge when they get to it.

walküre's picture

or wait till a really low tide...

monad's picture

Gold bitchez!

TheGermanGuy's picture

And people born 15 years ago will be 5 meters tall because they have grown an average of 10 centimeters a year and I see no reason for that to change... I mean there will still be food around and stuff, so why should it change?

pragmatic hobo's picture

sounds one of those sound-bites you usually hear at the top ...

KickIce's picture

Just what I was thinking, we heard the same thing in the US in 2007-08.

TheFourthStooge-ing's picture

Sounds like Hugh Best has been out dancing with Chuck Prince.

Frank N. Beans's picture

"...is therefore a bargain now, Hugh Best advises muppets..."

fixed it

 

monopoly's picture

And it is stories like this that show us the beginning of the end. And so it goes.

Eahudimac's picture

Yes, get them all in one place!

1stepcloser's picture

What they failed to mention is it can also be had for 4 oz of gold

Ignatius's picture

One doesn't move to the City of London for the weather.

obj089's picture

not that much. ~6-7% above inflation. i would bet it is around 30 - 60 

huggy_in_london's picture

Says LCP boss who is trying to raise £100m to buy property... what a surprise.  I never cease to be amazed how stupid some people are or how stupid they think others are.  

London will be a ghost town if a 2 bed flat were to cost £36m.... 

 

 

infinity8's picture

LOL. Here's the companionn article: http://money.msn.com/top-stocks/post--why-the-dow-could-hit-26000-by-2016

Instead it is far more likely that the Dow hits 26,000 by the end of 2016. It will happen more easily than you might think.

 

"All it takes is greater-than-expecte?d economic growth. The experts have us growing at a 3 percent clip in 2014. What happens if growth comes in closer to 4 percent this year?

 

I'll tell you what happens -- the Dow jumps 20 percent and closes the year within a hair of 20,000. We’ll get stuck on that psychological barrier, but it won’t take long to bust through.

 

In 2015, that 4 percent growth inches higher to 5 percent. That will be enough to push the Dow up another 15percent to close at 22,600 by the end of 2015. Then, if growth continues at a 5percent clip, a bull market rally will send stocks up another 15percent to 26,000.

 

There you go, and I wouldn't bet against us."

Newfie's picture

I wonder how much a cardboard box in a London alley will be worth in 2050?

Rock Sniffer's picture

No idea, but it will still be 10x most couples' joint income.

I'm long tents; there's going to be a real shortage when this thing implodes.

Poor Grogman's picture

Share your street with some newcomers!

http://swags.org.au

Graph's picture

Five o'clock afternoon tea in carboard box. Not unpleasant at all, rather lovely.

IMACOINNUT's picture

London will most likely look like a penal colony in 2050, and private security guards making GBP5 mm/yr doing their best to prevent more heads rolling.

Fix It Again Timmy's picture

Ok, but does it have a good view?...

Anonymouse's picture

That is some brilliant financial analysis Mr. Best.  But there's no reason that 9.2% gain can't continue compounding forever.  Why sell yourself short?

What's even more exciting is that by 2100, they will be worth 2.9B pounds!  And that modest flat your great-great-great grandchildren inherit in 2200 will be worth 19.3 trillion pounds!

What a bargain!

I certainly hope LCP is getting 2 and 20 for that sort of incredible financial skill/

jmcadg's picture

Someone cull this guy, he's an embarrestment to human nature.

Rock Sniffer's picture

Love to.  If some friendly country on the other side of the Atlantic will start shipping AR15s and copious quantities of ammo, I'll get it started.

markar's picture

And in 2050 UK a loaf of bread will be $100K GBP assuming the currency is still around

Escapedgoat's picture

4BED Res. not far from Centre of London

1963 £3,000.00

2014 around the million mark

I do not know what the salaries or wages were at the time but that is a fact I LIVE in it

 Do I count it as equity ? no fucking way  I need to sleep someplace

For any body intersted out there  I will sell the bricks according to the Value of the house

Cheers.