Sandcastles in the sky

Super prime abodes are weathering the storm created by the credit crunch and their owners are ideal clients, says Steve Atkins, director of Black Flag Consultancy

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The fourth most expensive place to live on the planet is not Barbados or Beverly Hills as some might suspect. Those who caught the ITV1 three-part series hosted by Piers Morgan, Britain's Got Talent judge and former editor of the Daily Mirror, will know it is actually a tiny little sand dune on the Dorset coast called Sandbanks.

This is no ordinary dune. On it and around it lie stunning golden sands, clear seas, luxury yachts, vintage champagne spilling out of every well-heeled resident's mouth and properties that are currently going for an absurd £10m apiece.

Nestled between Poole Harbour and Bournemouth, the old maxim "location, location, location" has never seemed more starkly pertinent because there cannot be many more wonderfully exclusive and exotic locations than this anywhere in Britain. But the influence of property prices on this tiny peninsula does appear to be spreading further afield.

Just last month a property in the vicinity set a new record by coming on the market for £10.5 m. However this house sits three miles from the peninsula and its amenities. All of this seems incredible in the present climate but what is happening on Sandbanks illustrates a dynamic that is often ignored in current industry comment: the super prime market in the UK is actually doing very well thank you very much.

In fact the number of homes selling for more than £1m has almost trebled in the last five years with the stock of £1m-plus properties in England and Wales reaching around 88,000 compared with some 30,000 five years ago.

It is not just footballers and Russian billionaires who are living in millionaire's row nowadays. Nevertheless it would be naive to suggest the current climate has not had an impact. The crunch began to hit the London market, where many of these properties are based, fairly quickly with price growth slowing rapidly between September and December last year and the impact on sales volumes noticeable even in £1m-plus properties. Yet further up the scale it is a different story. The one area of the market that remains strong is the very top end, more than £5m and certainly in excess of £10m.

It is a myth that clients buying these types of properties do not need finance, they would much rather see their available funds generate a potentially higher return in their investments or business than avoid the relatively low cost of a mortgage. Advisers who can access this end of the market could find themselves able to buck the trend of underperformance with a handful of transactions. But how many of these clients simply walk in to your office?

In order to penetrate this area of the market for gain you must have a well-defined strategy. You may want to look at where you advertise and the look and feel of your marketing materials. Often areas with an abundance of super prime properties have a free periodical that doormats monthly targeting the wealthy for a range of goods and services.

Are their establishments in your vicinity that cater for the well to do and do you have an association? You may want to review the levels of service you offer and look at embellishments to the end-to-end process. Yet more often than not those advisers who find they are providing mortgage advice to the purchasers of a super prime property are doing so because they did a good job when the client was a little lower down the property ladder.

The majority of super prime properties are sold under the counter without recourse to anything as brash as advertising and this offers another income opportunity for advisers with high-net-worth clients.

Clients at this level prefer a bit more discretion and often use specialist property search agencies rather than resorting to estate agencies.

Tim Sharp, director of Elite Property Search, said: "More and more high-net-worth clients are appointing buying agents to represent them for the sourcing and acquisition of their new home. Property search agencies offer many important advantages, including an intimate knowledge of the premium UK property hotspots and access to million pound plus properties not available on the general market."

Many of these agencies are keen to hear from advisers who are able to introduce potential clients looking to purchase at the top end and will pay a sizeable referral fee for a successful transaction.

Often this fee is linked to the price of the property. Forming a strategic alliance with one of these organisations could add value to your service offering as well as providing an additional source of income if clients use it successfully.

So have another look at your client base and consider how much they are spending as well as how much they are borrowing, both elements could be generating income for you. If you are lacking clients at the top end then review how and where you advertise your wares.

Strategic alliances, targeted marketing and good client management is the name of the game at the top end.

Steve Atkins is director of Black Flag Consultancy

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