Safe as Houses

London is sometimes referred to as the flight capital of the world.

If your regime has just been toppled, your king dethroned, your oil fields burned or, more recently, your tax status is about to be questioned by the Italian or Greek authorities, this is where you come. Embattled Eurozone refugees – or Eurogees – are the latest in a long line of foreigners to invest in what is now considered the only safe concern: Central London real estate. Although the word ‘invest’ is a bit of a misnomer; when accountants are sniffing around because your country is on its knees (and you’re largely responsible because you haven’t paid a penny in tax for 20 years), you’re more akin to a fugitive than an upstanding Belgravia landlord.

A Milanese friend with no ties to London recently called to ask in which neighbourhood he should buy his playboy son a flat – this 28-year-old rises at noon, goes clubbing all night, drives a Ferrari and has no intention of ever living or working here. The exercise was about taking money out of Italy and putting it in someone else’s name, before the new, streamlined Mario Monti-run Italian administration sniffs it out. Ten years ago he might have squirrelled it away in a Swiss bank, but this is no longer the easy option. ‘Governments are forcing Switzerland to open up on secrecy,’ says a wealthy Italian businessman based in London. ‘Italians with money abroad don’t want it to go back to Italy and think London is a better investment. If it’s structured properly, it’s probably shielded from the Italian authorities.’

The fact that the Bulgari Hotel (an offshoot of the Italian luxury goods brand) is opening in Knightsbridge in May (home while you’re shopping for a third home) and that C&C Milano, the most luxurious of fabric companies (whose owners were reportedly the inspiration for the family in I Am Love, starring Tilda Swinton), is opening in Chelsea Harbour next week, speaks volumes about the influx of wealthy Italians, who now count for 4.5 per cent of top London real estate owners. ‘London is the only truly global city in the world,’ says Emanuele Castellini, whose family are related to the Fiat-owning Agnellis and whose exquisite designs cater to the (good) taste of the Italian upper classes, including Giorgio Armani. But Eurogees are not interested in joining White’s club or playing cricket. For them London property is merely an ersatz hedge-fund investment. They’d buy farm equipment or pork bellies were they tax-minimising options.

‘Italians are not moving here. They are buying property to move money out of Italy and out of Switzerland,’ confirms the Italian business-man. ‘If they are rich, they will leave the property empty, or rent it out.’ Eurogees who do choose to stay in London do so because of (let’s get the priorities right) low tax rates, quality of life (no kidnapping, and you can pay by cheque instead of bribes), and the British educational system (which teaches children not to pay off officials with bribes). By ‘stay’, I mean they remain in town during the school terms then immediately return to their ancestral villas in Gstaad, Patmos or Tuscany every holiday. People who need to park their money in London real estate generally have a lot more where that came from.

Eurogees are never lonely: the European rich are like an extended family who holiday in the same places – St Moritz, Mustique, Sardinia – and intermarry. Top Italian hostesses such as Sara Carello and Aliai Forte cushion newcomers’ entrée into society (theirs, that is) and prepare them (they share tutors) for top Euro schools (Garden House, Eaton House Prep, Wetherby, the French Lycée and elite boarding schools such as Harrow, Eton, Winchester, Wycombe Abbey and Downe House). The jet-set shun day schools. It would be too common to have to drive to Battersea or Highgate – besides, they don’t even know they exist.

According to Liam Bailey, head of Residential Research at Knight Frank, the share of the London property market owned by Greeks and Italians has more than doubled in a year. ‘That’s a 163 per cent rise in sales,’ he says. In terms of London geography, Italians prefer apartment living and are happy settling next to all their friends in Knightsbridge and South Kensington, or as close to the Chelsea football ground as possible (this is also a canny investment choice: property values in Kensington and Chelsea have risen by 9.3 per cent in the past 12 months alone, to an average price pushing £1 million). The Greeks already have a settlement around Eaton Square from the days of the royal family’s ousting – Belgravia is a five-minute cab ride from their favourite haunts in Knightsbridge and Mayfair: Nobu, Zuma, Nozomi, The Arts Club and, of course, Annabel’s.

Eurogees don’t buy palaces or tacky North London McMansions: tax fugitives are stealth buyers. ‘Greeks typically buy two properties at the same time,’ says Bailey. ‘They’ll buy two £8 million houses, one for themselves and one for their children.’ Italians choose discreet properties (mostly in the £1 million to £5 million bracket), which they decorate tastefully, with the help of C&C Milano or Olga Polizzi. Typically, rich Italians will already have one or two or ten London flats, rented out (under the tax radar, in cash, of course) to friends. I once tried to rent a house in Chelsea from an Italian friend. His instruction for payment (delivered in an earnest tone) was to wait for ‘Guido’ to appear on a Vespa at midnight once a month to collect it in cash.

Eurogees are highly secretive when it comes to financial details. Most buy in the name of a company, which helps reduce the five per cent stamp duty for properties over £1 million. At a low estimate, they account for £1.5 billion in recent sales. ‘About 50 per cent of transactions are done privately, off the market,’ says Bailey. Developers who work in the £100 million bracket never even know who their end buyers are. Many of London’s most exclusive properties are bought through an intermediary and allow no record (eg, builder’s photography) to be kept – if you’re trying to escape the eyes of the taxman, you don’t exactly pose for House & Garden, do you?

The Greeks and Italians are following a long tradition of investing in London real estate as a hedge, says Trevor Abrahmsohn, managing director of Glentree, a property company catering to the super-rich of North London. ‘London fundamentally changed in the 1970s. Before then it was a souvenir town with no commerce. Then, in the late 1970s, there began to be an influx of money from countries that were experiencing political uprisings, such as Iran and Greece. Later we had the fall of the Berlin Wall and more recently the Arab Spring.’ And in the 1980s London became a global financial centre, which brought in the American bankers. Thanks to its geographical setting, London has also now become the favoured city for wealthy Russians and Indian and Chinese investors.

England’s main attraction, says Abrahmsohn, is its history of political and religious tolerance. It’s also admired for its stable political body and strong legal system. A coup d’état isn’t very likely to happen here and any electoral change (which Eurogees dread) won’t happen overnight – giving them time to sell up and run again.

Add all this up, and it explains why London could soon be mistaken for Monaco. The top-priced London residential development One Hyde Park has already broken all records. It clocked up £110 million in sales in January alone – and let’s guess which two nation-alities helped it to get there. At £7,500 per sq ft for its top flats, One Hyde Park makes even Monaco look reasonable.