Marc Von Grundherr, the director of Benham & Reeves, oversees the London-based property agent’s rentals operations as well as securing new business for the firm, which has 16 offices in London and eight overseas.
Mr. Von Grundherr began his career in investment banking, and is now a regular media contributor in the U.K. in addition to his role at Benham & Reeves.
We caught up with Mr. Von Grundherr, 50, to discuss foreign buyers’ commitment to London, the eventuality of the “Boris Bounce,” and more.
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Mansion Global: Will the coronavirus fallout destroy the "Boris Bounce" that we started to witness in prices and sales after the Prime Minister was re-elected?
Marc Von Grundherr: Honest to god, my short answer is no. What Covid-19 brought is an interruption more than anything else. People still want to transact. In Q1, everything was bouncing back. And then there was a massive interruption. But that bounce has almost already bounced back—buying, viewing and sales are back with a vengeance.
Fundamentals are still the same, and there’s still demand. Even if one-third of the interested parties don’t go through with deals, we’re still up. A lot is being reported negatively, but pent up demand is still there; low interest rates are still there.
In China, we’re already seeing the numbers bounce back. We’re seeing a big V-shape. The U.K. will be the same. It’ll take time, but it’s more an interruption than anything else.
MG: But you have to think that people will be a little less likely to pay asking prices?
MVG: A hundred percent There’s always going to be bargain hunters, too, who are going to take advantage of a downturn. We’re already seeing a bit of a standoff, where buyers are thinking, I shouldn’t have to pay the full price now, with the uncertainty and not many things happening. Sellers, on the other hand, are thinking, I don’t have pressure to sell, I can wait a few months.
Developers may feel differently, though, and be more open to negotiate. We did one with a 23% discount, but that property had been overpriced. But developers tend to have timelines by which point they want to get out of the project.
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MG: What are the short-term effects of Covid 19 on U.K. real estate?
MVG: Undoubtedly there will be fewer transactions. This will simply be a deferment for the third quarter. We’re expecting July to September to be very busy.
People are saying they want to sell but they don’t want it advertised. They don’t want people thinking their house has been on the market for six months. We still have people who want to move and buy, sell and rent. I think transactions will come back, if not prices.
Stats will be all over the place because there are not a lot of transactions to report. Over the next three months, the figures will be all over the place.
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MG: Do you expect foreign buyers to dry up?
MVG: They’re already coming back. Every sale we’ve done during Covid we did to a foreign buyer. That’s because they can buy off plan and are used to seeing things virtually. And from a currency perspective, England is still much cheaper than it was a year ago.
An additional stamp duty is coming in April, so people need to complete a transaction before then. Foreign buyers will not dry up.
Also, what’s going on in Hong Kong drives people to London, which is seen as a safe haven.
MG: What about the longer-term effects?
MVG: From 2011 to 2014, we saw double-digit growth every year, and that’ll continue. When we’ve gotten out of this, and it’s gone back to normal, we won’t see long-term effects.
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MG: Will buyers' tastes change as a result? Will flats be less popular?
MVG: If you’re super wealthy, you can have both a flat in the center of London and a house elsewhere. I don’t see flat living as less popular, but Wi-Fi is the most important. Maybe more people will be working from home, but that doesn’t mean five days a week working from home.
It’s like after 9/11, people said it was the end of urbanization and that there would be no more towers, but we’ve seen the biggest construction of towers since then.
MG: Will developers design for different tastes?
MVG: Developers have difficulty changing and adapting, especially the larger ones because they plan years in advance. They could change to larger units, but it’s a massive risk because they have to increase their price, and may price people out or price themselves out. Value is always the key consideration. You can’t change direction so quickly. Planning in the U.K. is the worst, so I don’t see it.
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MG: If you could live anywhere else in the world where would that be?
MVG: I would still live in London, but I wouldn’t mind a second home in Barcelona or in the Cotswolds.
MG: How do you define luxury in real estate?
MVG: When it comes to neighborhoods, it’s places like Belgravia and Mayfair and Kensington. Then it’s about finishings. Things like Carrara marble—old, traditional style—they last and endure. On the other hand, using bold colors such as greens, oranges and pinks look tired quite quickly.
Luxury buyers often also want a panic room, a wine cellar, staff quarters. We hear those things. People want indoor pools, too, sometimes.
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MG: What's the most valuable amenity to have in a home?
MVG: For a U.K. buyer, not in prime central London, it’s your attic. If you buy it with an attic, you can convert it and the return on investment outstrips anything else you can buy.
In London, anywhere with off-street parking.
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