After A Scrape, Sky’s The Limit For Penthouses
The Sunday Telegraph, Home & Living, 3rd June 2007The posh pad at the top of the block used to be the white elephant of the property market. Now they’re selling again, says Ross Clark
At a time when the London market is booming, it is quite a feat to spend four years without finding a buyer. Yet that is how long the one remaining four-bedroom, 3,680-square-foot penthouse at Albion Riverside, the Norman Foster-designed block in Battersea, has been on the market.
Saddam was in hiding and Baghdad had yet to fall when developers Hutchison Whampoa launched the 13 penthouses at Albion Riverside, for prices between £3 million and £10 million. In bullish mood, James Barrett, marketing manager for the developers, said at the time: "We’ve had a lot of interest from individuals including two Germans and some Arabs. Believe it or not, the two most expensive penthouses are the ones we have had most enquiries about."
There is nothing particularly unusual about Albion Riverside. For several years they were the white elephants of the London property market: vast, glass-walled top-floor flats bearing fancy prices, advertised with gorgeous photography but with few takers. It didn’t help that the very name ‘penthouse’ spoke of faded glory and the 1970s soft porn magazine of that name. Between 2000 and 2005, there was no surer way to lose money than to buy the top floor of a new development. While investors who bought off-plan were making healthy profits on one and two-bedroom flats downstairs, those who bought on the top floor could only look with envy. Take St George Wharf, the vast steel and glass development at Vauxhall Bridge. Flat number 30, Bridge House, one of the smallest flats, sold for £159,950 in June 2000 and again for £244,950 in February 2002. Yet upstairs, number 46, which sold in February 2001 for £3.95 million, failed to generate excitement when resold in September 2004: its price crashed to £3.1 million.
It wasn’t just London, either. If anything, some of the prices asked of penthouses in Manchester, relative to local prices, were even more ambitious. One that did sell was the 3,050-square-foot, three-bedroom penthouse at Number 1, Deansgate. It went in February 2002 for £1.5 million. It is now back on the market for £1.65 million, through Knight Frank (0161 838 7744).
Penthouse owners who clung on, however, can reasonably ask themselves if the day of the penthouse has finally arrived. They have had their tails up ever since February, when it was reported that a penthouse at One Hyde Park, the Candy & Candy development in Knightsbridge, had sold for £84 million. It will be impossible to verify this until the building is complete and the sales start appearing on the Land Registry. Nevertheless, in a reversal of the market that existed between 2001 and 2005, it is clear that the top end is now doing better than the bottom.
"Historically, penthouses tended to be the last to sell”, says Alex Stroud of Savills. "Most of a development would be made up of small flats, which sold well, then there would be this big elephant on the top. But now, it is the big elephant which everybody wants." This year, he says, he has sold three penthouses, all very quickly. A fourth, at the Icon, a six-year-old block off Grosvenor Road, has been on the market for a couple of months at £4.47 million: it sold for just over £3 million in 2001. Three off-plan penthouses, at Charterhouse Square, Clerkenwell, east London, priced between £1 million and £1.5 million, proved so popular that they sold within the first few hours of launch and a fourth sold in a day.
It is a similar story at Perspective, the conversion of the old MI6 building in Lambeth. When it was launched in 2001, the penthouses were slow to sell. Apartment number 164 eventually sold in June 2003 for £1.5 million. The two-bedroom, 2,626-square-foot flat is now back on the market for £4 million, through Knight Frank. At New Providence Wharf, the vast, horseshoe-shaped development at the north end of the Blackwall Tunnel in Docklands, a 2,664-square-foot apartment with a particularly large roof terrace overlooking the Millennium Dome sold last May for £1.85 million. It is now for sale again, through Knight Frank, with a price tag of £3 million. More are in the pipeline. The developers Northacre and Minerva have won planning permission to convert the Thistle Hotel at Lancaster Gate into flats; the penthouses will range from £5 million to £35 million.
Even at St George Wharf, things are looking up. Sarah Haslam of Knight Frank has just sold a penthouse there within days of it going on the market with an asking price of £6.95 million. Recent resales of the early penthouses have also begun to show good profits. Number 142, which sold in November 2000 for £950,000, sold again in November 2006 for £1.6 million, and number 118, which sold in October 2000 for £684,500, sold again this February for £1.3 million.
Penthouse owners have seen their fortunes waver relative to the owners of smaller apartments because the market is fundamentally different. In many developments, the smaller flats were quickly snapped up by investors when interest rates were low. Penthouses, which have a much larger outlay and a small yield, do not appeal so much to investors. "They tend to be bought as boltholes, for use by their owners while they are in London," says Sarah Haslam. It is exactly that market which has been doing best over the past 18 months: foreign buyers looking for an occasional home-cum-investment in London.
However, it is not necessarily any longer the top floor to which these sort of buyers are looking, says Ed Mead of Douglas & Gordon in Chelsea. "I can’t remember the last time anyone rang me up and asked me for a penthouse," he says. "To a developer, they have always been considered the cream of the development, and have often been marketed at 50 per cent more, in terms of price per square foot, than apartments on the lower floors. But the term ‘penthouse’ has been devalued, with any old top-floor flat now described as such. In any case, with modern building regulations there is less of an advantage to being on the top floor: the advantage always used to be that you had nobody walking around above, but soundproofing is better now."
If you do want a vast penthouse, it may be more difficult to find in the future. Having burned their fingers, suggests Sarah Haslam, developers will favour smaller apartments on the top floor, rather than one prestige apartment: would Albion Riverside have been built with so many expensive penthouses were it being built today? "There was a psychological barrier at Albion Riverside to paying more than £3million," says James Barrett. "You only have to cross a bridge to be in Chelsea, but it was difficult for some buyers to get to terms with crossing it. In a way, it would have been nice not to have so many penthouses at Albion Riverside, but it was dictated by the shape of the building."
According to Hutchison Whampoa’s sales centre, the £10 million penthouse did finally sell last year. The highest recorded price paid for a flat at Albion Riverside is £6.75 million, which sold in November last year. Mr Barrett insists the largest penthouse went "not far short" of £10 million but is on a delayed completion.
Charterhouse thesq - one to three-bedroom penthouses in Clerkenwell, east London, to be completed next year. Prices range from £1m to £1.5m. Currell Residential, 020 7253 2533, www.charterhousethesq.com