Market Comment

End of Year Newsletter 2009

Well, here we are at the end of 2009 and certainly at the top of the property market; what a non-event of a year it was until the last quarter. Basically, the first quarter was extremely quiet with only one significant deal (£5 million+) which in fact was a transaction that had been in negotiation from around the last quarter of 2008. Telephone and email enquiries were at an all-time low.

There was a glimmer of hope at the beginning of April, when the telephones started to ring and email enquiries soared, driven by the realisation that the UK Chancellor would have to increase taxes in order to address the vast financial black hole created by the banking crisis. How many generations will it take to re-balance the books with a deficit of £175 billion... gulp!

By the beginning of the third quarter we were extremely busy, not with sales but with people making the trip to Jersey to take a look at the island for themselves. For me this highlighted two problems. Firstly, it is amazing that so many people still think that Jersey is a sleepy 1950s seaside resort. Thankfully, they are pleasantly surprised by the cosmopolitan atmosphere, the shops, restaurants and schools, marina and airport facilities and, of course, the natural beauty of the island. If Jersey wants to attract the cream of the financially successful along with the expected UK exodus of fund managers, it really needs to shout about what it has on offer. There is a lot of competition out there, yet Jersey’s geographic location, infrastructure and the fact that we speak English is really attractive. How do we get the message out there? Certainly Jersey Finance and Nigel Philpott do a great job, but there is only so much they can do. I would imagine that if everyone who has contacts in the UK and Europe spreads the word about how wonderful the island is and the advantages of living here, then the message will gently filter outwards. All of us islanders should take a real pride in Jersey. We are our own ambassadors and such positive attitudes will always bring about good results.

The second problem is the quality of the current housing stock. A good proportion of the current properties on the market have not been refurbished for years, but this is not necessarily reflected within the price. It is heartening to see that a number of the island’s developers have realised that there is a market for properties in the £2-3 million bracket that are finished to a high specification and, indeed, for stock at a far higher level. In my own experience, the vast majority of the people I see do not want to undertake a project. However they often find that the older properties they view may well have a great location, or be very pretty from the outside, but were last refurbished 10 to 15 years ago. Clean modern finishes and the latest electro-technology are definitely in favour and unless current owners wish to undertake a major refurbishment they need to keep in mind that the price of their property must be realistic and offer value for someone else to carry out the work.

Thankfully the last quarter has seen a turn around in sales at last! There has been movement in the £2-3 million category and one exceptional sale at £8.5 million, Jersey’s largest house sale to date.

It is interesting to note that, with some notable exceptions, the houses that have sold have seen a fairly stern adjustment between the asking price and the actual transaction price. Many of these properties had been on the market for at least 12 months and the correction in price simply reflects where the market was, compared to where the market is now. The purchasers have been a mixture of 11K, J category and local professionals.

My feeling is that the tide has reached it’s lowest ebb and is already on the turn. This will not lead to any immediate increase in values but, dependent on the number of people fleeing London and the UK in general, there should be enough movement at the top of the market to lead to a natural increase. Certainly from all of the recent publicity in the national and local press, Jersey appears to be perfectly placed to take advantage of any UK exodus.

In summary, we have all come through a very difficult period but thanks to Gordon and Alistair the island would appear to have been gifted a marvelous opportunity to attract a new intake of high net worth families and businesses. This will benefit all islanders through the increased tax revenue and retail spending that accompanies such an intake, not to mention the inevitable entrepreneurial talent.

For Edge it has been a good year. Earlier in the year, when there were no purchasers around, we used our time to tighten up our marketing both here and in the UK. Our adverts in Gallery Magazine have been highly effective. I like to think outside the box and, when everyone else is swimming with the tide, I prefer to be running on dry land! Our reputation as the island’s top end property specialist has spread to the extent that we are now recognised by the national press and that is something that makes us very happy as this will lead to tangible benefits for our clients.

In closing I would like to thank all of our clients and contacts for their support. No one can stand alone without the help of his fellow man (or woman!) and it is only because of all of you that we continue to flourish.

We wish you a happy Christmas and a healthy, happy and prosperous New Year.

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It is with a lift in my step that I greet you in this addition of the news letter. Why? Quite simply, since the beginning of April we have been busy with enquiries from people looking to move offshore, mainly from the UK, with some from further afield.

Several applicants have already visited the island this month and more are due to visit before the end of May. There is no typical profile and target purchase prices for the applicants range from 2-3 million up to the high teens, with one or two special cases prepared to pay whatever it takes.

The majority of people we talk to are not just casual calls, these are people who have decided that Jersey is the place for them over and above the (stiff) competition. Of course, the escalating tax situation in the UK is a major driving force behind such decisions to move in the first place but it is the overall quality of Jersey life and the fact that we are essentially “British” that makes us the preferred destination for many applicants. And, with such a financial black-hole, UK taxes can only escalate; not only income tax but surely death duties and inheritance tax along the way, not to mention VAT.
Sadly it is not just tax that is escalating but crime too and, when you put this all together and then compare what Jersey has to offer it is not too difficult to see why enquiry levels are up.

Of course, we are not out of the woods yet, however, with such serious interest at this time of the year it is very likely that by Christmas, those of us dealing with top-end real estate will be extremely busy and January through to April is likely to be manic.

Following an article in the Jersey Evening Post on 30th June titled “Interest falls in prime properties”; Edge Properties Director James de la Cloche says this is not the case due to the constant flow of high value residents coming to the Island.

In line with comments made by Nigel Philpot, Director of High Value Residency at the Economic Development Department, James emphasises that Jersey has seen little or no effect of mainland trends in the Jersey property market.

“Our enquiry levels are at the highest they have ever been and it seems the bleaker things become in the UK, the more attractive the Jersey market gets. Lifestyle and tax advantages remain the key factors drawing most newcomers to Jersey, and the lack of death duty and inheritance tax will always remain a factor in their decision making process”, says James.

Edge Properties recently launched a new website, specifically targeted at its 1(1)k and top end J-category customers,with an emphasis on discreet and confidential sales. Whilst the website gives potential customers a taste of what is available, a dossier of confidential properties is available to genuinely interested registered clients to peruse on a one-to-one basis.

“Edge offers a service unique to Jersey.As the only estate agency to focus solely on home finding, acquisitions and sales of properties over £1million, our in depth knowledge of the property market and a love for property generally, means we are ideally placed to service the exacting requirements of the higher spending client. Because we are concentrating on a niche market, we also don’t feel the brunt of the mid-market slump”, says James. “Typically, “K” applicants will be looking for properties in the range between £2m and £10m and due to a continued flow of high value residents, we anticipate the levels of sales continuing to increase for the foreseeable future.” ENDS.

I am sure you will have seen the recent articles in the JEP highlighting the strong growth in property values. At the top end of the market it is my belief that property will continue to out-perform other sectors. Our enquiry level is at the highest it has ever been and the bleaker things become in the UK, the more attractive our island becomes.Lifestyle over tax is the driving force for most seeking to make the island their home, although the lack of Death Duty and Inheritance Tax will always remain significant in the decision making process.

Typically, "K" applicants will be looking for property of between £2M and £10M. That said, it will only be a matter of time before the island sees some far higher values on property sales. Jersey is only now waking up to the value of what it has to offer.

The Edge service specialises in property of £2M and above with a minimum entry requirement of £1M; many of our instructions are of a confidential nature and do not appear on the website. The service offered is 100% tailored to this market and, just as important as the way such prestigious properties are handled, is the way that the incoming applicants are looked after. It is our aim to excel in both areas.

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