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Billionaire’s mansion deal reflects distress in market for London’s priciest homes

U.S. hedge fund manager Ken Griffin paid £95 million for a London mansion that initially hit the market with a £145 million asking price

Ken Griffin (Credit: Getty, iStock)
Ken Griffin (Credit: Getty, iStock)

Billionaire and U.S. hedge fund manager Ken Griffin recently paid £95 million for a London mansion that the developer initially wanted to sell for £145 million, a reduced-price purchase that reflects a decline in the value of London’s priciest residential properties.

Griffin bought a 20,000-square-foot home near Buckingham Palace after developer Mike Spink remodeled the property and private equity group Evans Randall financed the work. Spink reduced the asking price from £145 million to £125 million, and the property had been on the market for two years when Griffin bought it.

The number of London home sales at prices above £5 million was 36 percent lower last year than in 2014, according to real estate service provider Savills.

Slower sales and lower prices for the most expensive London homes have led lenders to reduce their valuation of such homes and to request additional cash from developers who are trying to sell them.

Roarie Scarisbrick of Property Vision, a buying agent who focuses on high-end homes in central London, told the Financial Times that he saw lenders repossess more of these homes last year than in the previous 10 years.

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Lenders are “extremely cautious,” and they routinely revalue prime residential properties in central London by 10 or 20 percent, according to Scarisbrick.

More than half of London homes purchased by private individuals for more than £5 million are collateral for mortgage loans, according to Jonathan Harris of Anderson Harris, which helps buyers of luxury homes obtain mortgage financing.

Harris says lenders have made margin calls, or requests for more cash from developers, on 25 percent of the loans on luxury London homes that were originated in 2014, the peak year for such financing.

The typical term of such loans is five years, which means many loans originated at the peak of the market will mature this year.

While repossessions of luxury homes in London remain rare, developers feel growing pressure to reduce prices on such homes and sell them to repay lenders. [Financial Times] – Mike Seemuth

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Luxury Real Estate