... and the numbers suggest, prime London is hot; well over 5% of Nestoria searches in London are for properties at prices over £1,000,000. 
No indication as to exactly how many people the 5% figure represents, but the bigger question may be how many searchers are merely curious and how many translate into viewings, offers or actual exchanges.
So much for the cooling market, it certainly ain't cooling online, with Extate's new money and Rightmove's expanding profit margin, certainly the right place to be investing - at least for the moment:
[Reuters]
Rightmove Plc, which runs Britain's busiest property website, reported on Friday 13.2 million pounds ($26.5 million) in underlying operating profit for the six months to end June, as the number of advertisers rose by 26 percent and visits to its property website increased by 58 percent.
"We expect to generate a similar level of year-on-year growth in the second half ... Property agents have to sell houses in a slowing market, and so they are doing promotions ... We do not see any noticeable deterioration in our business," Managing Director Ed Williams told reporters.
He said the length of time properties were staying on the market was rising, however.
Britain's housing market has slowed as five interest rate increases in less than a year to 5.75 percent and expectations of another hike to 6 percent damp buyer interest.
Rightmove earns subscription fees from its customers such as estate agents, rental agents and new home developers in exchange for allowing them to advertise properties, new developments and rental properties.[more]
After a telephone conversation with Detective Superintendent Oliver Shaw of City of London police, we can further reveal some of the issues surrounding the current London mortgage fraud investigation.
Firstly, Detective Shaw highlighted that the investigation is not just limited to London, but part of a UK wide program, being run by the Serious Fraud Office. He explained that the police led review will ascertain the fraud geographic hotspots and will also investigate agents, valuers and mortgage brokers. The police are also working closely with the FSA and other government bodies, which hold data on dubious finance brokers and companies which have been prosecuted or struck off their registrar.
So far, the investigation has revealed no complicity from lending institutions. In the past, some bank employees have been known to either sell institutional data to criminals, or to overlook due diligence procedures, presumably for an 'under the table' reward. So far the investigation has highlighted no such activity, focusing mainly on exaggerated mortgage valuations and fraudulent ID documents.
The investigation is likely to conclude 'around Christmas' after which further action will take place. The police are intent on minimizing the problems and putting mechanisms in place to prevent future exploitations. They are also looking to identify the most successful criminal gangs and prosecute them.
Detective Shaw acknowledged that the police are 'well aware' of the economic dangers of potentially flooding an already cooling market with property that were obtained fraudulently. In the early 90's property recession, a similar problem occurred and the property crash forced banks to review their loan books after defaults and repossessions.
When the banks remarketed repossessed properties they achieved prices way under valuations which were originally suggested when the loan was processed. In today's cooling market, the same problem is likely to occur and the banks are currently doing everything they can and looking at every angle in order to mitigate their losses.
First round ; from Extate Blog
BytePlay, the parent company of Extate, has received equity funding from The Accelerator Group (“TAG”) and Arts Alliance, backers of both lastminute.com and online DVD distributor LOVEFiLM, and from Samos Investments, which funded the online betting exchange Betfair. Joining BytePlay’s co-founders Artemi Krymski and Douglas de Jager on the company’s board are Robin Klein, Chairman of TAG, and Adam Valkin, a partner at Arts Alliance and a former director of propertyfinder [more]These are the some of the same people also backing moveme.com , as we reported here last April.
City of London Police have launched an investigation into allegations of commercial and residential mortgage fraud in London. Reports have led police to believe that criminal gangs, working with corrupt valuers and solicitors, are obtaining fraudulent mortgages, enabling them to build multi-million pound commercial and buy-to-let property portfolios worth millions of pounds. The investigation was launched after a rise in the number of complaints about the use of fake self-cert documents and fraudulent papers by individuals to inflate their earnings according to The Times:
Fake P60 forms, used to illustrate earnings, are widely available online. The Council of Mortgage Lenders (CML) yesterday confirmed that lenders face serious risks from fake documentation rackets ... Detective Chief Inspector Oliver Shaw, of the City of London fraud squad, said: “We have identified criminal networks that have obtained very large commercial and residential portfolios by working with corrupt valuers and solicitors. ... James Cotton, from London & Country, a broker, said yesterday that lenders also faced risks from self-certification mortgages: “We have seen the impact of people lying in America. It is the same here. It’s just difficult to know the extent to which borrowers have lied about their income because the point of self-certification deals is that lenders don’t check.”So far, City Police have released no details on the extent of the alleged fraud, or names of companies or individuals who are being investigated or arrested.
The first stage of the police investigation - establishing the lenders’ potential liability over defaults from fraudulent loans - is expected to be completed by the end of the year.
Yup, that's right, we made the Rat and Mouse headlines this morning by calling out Liam Bailey over the weekend. Who's next, Guardian, Times, Evening Standard, Metro, c'mon guys we know you're reading, show your love (:
Thanks to Ben for the support, but more importantly, it's nice to see we have backing in our argument, given the Telegraph article Rat and Mouse also linked to this morning. Ironically, that article also quotes extensively from Liam, but this time he's supporting the theory that the foreign buyers are propping up the London market, also verified by Land Registry figures released today and the fact that London is apparently set to break another record in bonuses this year in spite of the credit crunch. Who knows, maybe we were a little premature in calling out Liam like that, since the Telegraph article shows that he was putting together the Prime Central London Index. Maybe he didn't have all his figures together before FT went to press on Saturday; or maybe he was just plain misquoted, or maybe the FT was perhaps maybe guilty of a little sensationalism, tabloid style journalism? Could it be? Maybe? Nah ... not the FT, say it ain't so... please
Barcelona based Properazzi.com, the award winning search site is now boasting over 4 million listings in its database, making them the worlds largest search engine exclusively dedicated to property. This follows a trend in the European vertical property world, starting with Extate launching a South African service this past spring followed by Nestoria's Spanish based service, a few weeks later.
Properazzi's new service now includes natural language search processing; a density Google map feature; localized interface translations in 32 languages and the impressive ability to view property prices in nearly 100 currencies.
I still did find the map a little clumsy to use, and got frustrated trying to look for property in Libya (I've always wanted to live there, the weather and the women are really nice I'm told :)
Surprisingly in my Libyan search I wasn't able to come across any listings in Tripoli, the capital and largest city in the country. And no properties found in Dubai or the Emirates, which has a much hotter property market than North Africa, and which in my opinion, would have made more logical sense for Properazzi's expansion out of Europe.
From a UI standpoint, even though I'm feeling the look and feel of Prop's Google mapping, I still wish they had included an old skool drop down menu listing all 49 countries on their database. With so much choice available to me it was difficult to know exactly where and how to start searching. Plus geography was never my strongest subject, so even though I may have known the name of a country, town, or city where I wanted to search, I had difficulty finding it on the map (like Tripoli for example).
Properazzi's technical success poses a dilemma for them from a business and marketing perspective, in that their unique strength of having properties listed from 49 different countries may actually prove to be their greatest weakness. All real estate is local and consumers want local intelligence, which is something Properazzi fails to deliver. Even though they have the technical ability to cover 49 unique markets, they lack the local intelligence that consumers ultimately look for when choosing real estate. One thing Properazzi has to do to gain credibility with consumers is to actively engage the local agents in the individual markets they cover. If they don't do that, their impressive technical abilities will soon prove worthless. It's probably the main reasons why Trovit fell off the map (pun intended) after starting out with a bit of hype. Certainly here in London they never bother to engage with the local agents. Maybe they act different in some of the other markets they cover but except for posting the odd comment on Techrunch or Blognation, Trovit is nowhere to be seen, so people forgot about them. They exist in the abstract world of the afterthought, maybe that's how they want to exist. Properazzi may end up in the same world if they're not careful.
The flip side however, is that with all this data that they collect, Prop is in a privileged position to begin servicing global property professionals and investors, who pay big bucks for this kind of data. That's what's making Cushman Wakefield, Knight Frank and CBRE the multibillion powerhouses they are. If Properazzi were to begin collecting and organizing and publishing information similar to what Nestoria recently did, they could be well on their way to making some serious money. 2.0 real estate guys, you're missing out on a huge money making opportunity by not taking advantage of that aspect of your business. Relying almost exclusively on a advertising model is flaky.
It's perhaps the one reason why Rightmove is the UK's number one property website and will remain that way for a long time, even though their search experience is really crap. They actually don't give a sh*t. They're in the 'search collection business' and by publishing the Rightmove Index every month, they're now considered reliable, credible and authoratative.
A few months ago, Zoomf launched the Zoomf index, which was 'hot'. But now that they're under new management, that idea seams to have fizzled out completely. Nestoria sporadically publishes search analytics, but so far nothing organized and consistent from them.
Of course, once the local agents find out you're using their data to process the information it could get messy, but still ultimately worth the price.
I'm going out on a limb and publicly challenge Liam Bailey [pictured], head of Knight Frank residential research and one of the most respected and influential real estate analysts anywhere in the world.
This past weekend, in a front page FT article on the subprime fallout and London property, Bailey is quoted, claiming that if there is an expected and highly probable "downturn in City profits and employment levels, [read: smaller bonuses] you couldn't be surprised if central London prices fall". The article also paraphrases Liam claiming "a correlation between the health of the City and London residential prices' and that prime London property "suffered badly in 2002 and 2003 after prices of technology and telecommunications shares crashed."
What makes the 2007 property market different to 2002, and what Liam (and the FT) failed to highlight in this weekends article is the growing influx of foreign property ownership in central London and its impact on the property market. Bailey and the FT writer failed also to highlight Bank of England interest rate policy, which towards the end of 2003 was on the rise and may also have had an impact on the percieved slowdown in prime London real estate.
Again, another article writen by the same FT writer (Jim Pickard) in June 2007 and also quoting Liam Bailey:
The central London market has been propelled as never before by a surge of buyers from overseas, in particular the Middle East, Russia, India and China but also from European countries. The price of a top-end house in London has risen 46 per cent in the past two years, a rate of inflation four times the national average, according to research by the FT.The article highlights 271 central London homes sales closing at over a million pounds in February of this year, a 33% increase over last years figures. So what are we supposed to believe?
Liam Bailey, Knight Frank research head, says price rises in parts of London - Belgravia and Knightsbridge - have hit 45 per cent. But he predicts: "We believe that by the late summer price growth will begin to become much more subdued."
In 2004 and 2005, Knight Frank had 16 applicants per top-end property. This rose to 32 per property during 2006 - but has since dropped to 18.
With all the sub-prime turmoil that's happening stateside and the fact that house prices are dropping - even in Manhattan; plus the dropping US dollar, the question has to be asked, is it the right time to buy?
[update - I don't have the answer to this question, I'm hoping you could help me by dropping a comment, or sending an email. If you're in the States and know any great investment opportunities, feel free to share them with us]
Reputable economist Fionnuala Earley of Nationwide Building Society this afternoon released the following statement on the Wall Street selloff and its potential impact on the UK housing sector:the implications for the UK housing market ... could mean that wholesale funding costs will increase and that lenders tighten up their own criteria, particularly those that are very dependent on wholesale funding. However, if the Bank of England see these current developments as a real threat to the City, this is likely to reduce the risk of further increases in interest rates, counteracting some of that effect.” [emphasis added]
Earley's comments are somewhat contradictory in nature to the tone Mervyn King and the BoE set in his press conference 2 days ago. Paul Tucker, the banks Executive Director for Markets stated that the fundamental pressures in the financial markets - driven mainly by the subprime crises - was isolated.
King said that he doesn't make any predictions on the housing market, but that he was 'surprised' by housing's resilience. He adamantly stated he would not use interest rate policy to bail out 'unwise lenders' and claimed to find no real challenge to the global 'macro-economic outlook'.
However, it appears central banks around the world beg to differ with King's analysis. In response to the crises, Japan's central bank injected one trillion yen (£4.2bn) into the Tokyo market, The European Central Bank pumped €61bn (£41bn) into European markets; Bernanke's Fed added $24bn (£12bn) to the US banking system and the Australian central bank took similar action.
What prompted the interventions from the central banks was that overnight money interest rates shot up this week because cash was scarce. In other words, the price of money rose because it was in short supply.With the price of money rising, no doubt consumer banks will pass those rising cost onto consumers. Yet King remains silent, even though the FTSE's crumbling.
As of late today, it appeared that the huge injections of funds in the US, Europe and beyond had had the effect of pushing those overnight rates back down again, relieving the pressure on the banking system, for now at least.
[guardian emphasis added]
Spend it on London real estate, what else?
That's what hedge fund trader Chris Rokos of Brevan Howard Asset Management plans to do with a few of his millions. Rokos's ambitions are to convert the former Hyde Park West Hotel at 25-26 Pembridge Square into a luxury 10-bedroom home:
the most astonishing element is his plan to dig four storeys below ground to create a 16ft-deep swimming pool with a high diving board.Here's the link to plans Rokos submitted to Kensington and Chelsea planning office.
A neighbour, who declined to give his name, said: "Nobody can quite believe the scope of what he is planning. The hotel is already 17,000 sq ft and he is seeking to increase that. It seemed such an extraordinary idea to dig that far down."
Quoted in the Evening Standard, he said: "It just seemed beyond belief. There are concerns about the structural implications for surrounding buildings but on the whole people are quite supportive of his plans as they will improve a derelict building." [Telegraph]
