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It’s Home Sweet Home For Luxury Real Estate

A luxury pad in one of the world’s most exclusive neighborhoods might be seen as an indulgence for only the super rich. But international real estate developer Nick Candy told CNBC that for the shrewd investor, it can often be a long-term commitment worth making.

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Candy is one half of property duo Candy&Candy, whose most high profile build was One Hyde Park — an apartment block in London’s Knightsbridge area and one of the most expensive addresses in the world.

Sitting just yards from Harrods department store, the luxury boutiques of Sloane Street and a short walk away from Buckingham Palace, prices here range from a relatively modest $5 million to an astonishing $215 million for a three-storey penthouse. But with 24-hour room service from the 5 star Mandarin Oriental Hotel next door, wine cellars, bomb-proof glass and even panic rooms, is an apartment here a lavish folly or a smart investment?

"I think people are buying for the long term," said Candy. "I think they will get passed down the generations. Something like this won’t get built again for a long time."

And while $9,000 a square meter sounds like a big gamble, he is sure that long term investments like these ride out difficult economic cycles. "I 100 percent believe that if you invest in the very best — not just in real estate but in the rarefied world of commodities — then I believe that you will do very, very well."

An international city like London, it seems, is a safe place to invest despite the downturn, because of the constant cycle of foreign cash being pumped into the capital.

"London is still a very strong market. In the 1970s and 80s we had the Middle Eastern money; in the late 1990s we had the Russian, Ukrainian and Kazakh money and today we have the Indian and Chinese money.

"There is more international money coming in than ever before."

He warned that property can suffer from delays, overspends and plans that never come to fruition, but ultimately big cities have the international demand to make luxury property a winner.

"London can soak up—from the number of international purchases that are coming in—a lot of supply that is coming onto the market," he said. "We have very limited supply because it takes a good five, ten years to build a good project. Limited supply, huge demand; prices will continue to increase."

Candy pointed out the seasonal variation in this particular market, meaning the prospective investor has to allow for the quiet summer months, during which high-worth individuals prefer to be on their boats than in the office.

So while the sub-prime mortgage crisis that ignited fears of a global downturn may have scared some off real estate investment, with 25 nationalities represented at One Hyde Park, Candy is sure that there is an international trend to buy big in property again.

A devalued sterling has made London property buying a popular choice, but Candy explained that major cities all over the world were seeing similar success at the top end of the market.

"New York is still very strong, it’s very American centric though – 80 percent of people buying expensive apartments in New York will be home grown Americans," he said.

"I think Dubai will have a bounce back partly because of the Middle East uprisings. The Gulf regions want to go and buy real estate in Dubai. Also when you have that big a correction and big a fall, I believe that it will go up quite quickly as well."

And the best places for this kind of investment? Not surprisingly, healthy Asian economies provide the most stable conditions. "Hong Kong, Shanghai, Singapore; these are the areas of the world that I truly believe can sustain the high end product, and will have the demand for it," Candy said.

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Alternative Investing 2012