Hugh Wade-Jones, the managing director of Enness Global the high net worth (HNW) mortgage brokerage with offices in London, Monaco, Dubai, Jersey and elsewhere globally, has highlighted an increasing trend in the luxury property marketplace. Enness Global have been seeing increased inquiries for properties along the French Riviera, in Spain, in Ibiza and even in places as far away as some parts of the Bahamas. Traditionally these areas have been seen as luxurious second home or holiday home locations but it is now being seen very much as a necessity by the High Net Worth community to have a home in one of these popular locations for longer term use.
This is a trend in the post-pandemic period, but that also looks like it’s going to continue well into the future. The more long-term trend that is expected will be that of working away from the office for prolonged periods of time. It is likely that people may not be based in city centres continually throughout the whole year and just leave to spend time in their holiday homes once or twice a year for short periods of two or three weeks. But instead, as is already becoming more common, to spend periods of two or three or four months a year at second properties away from city centres. Some high net worth individuals and ultra-high net worth (UHNW) individuals now own third and fourth properties around the globe. As a result of this increasing trend, the number of inquiries for borrowing at mortgage lenders has gone through the roof for the type of luxury properties sought as second, third or fourth homes by these wealthy buyers.
Another reason for the popularity of owning multiple homes across the world that can be lived in for lengthy periods and from where people can easily work for several months at a time is the historically low cost of borrowing to finance these homes. Whether that’s through a mainstream mortgage or other cost-effective financing such as bridging loans, which are a fast way to arrange a loan that is individually negotiated and tailored to each particular situation. Bridging finance, whilst not without risks, can be used to solve problems such as being temporarily short of capital or where a property purchase is up against a tight deadline. They can also be used to enable people to take advantage of opportunities when it comes to a property purchase without having to go through a long mortgage approval process.
A couple of specific examples of purchases that Enness Global have recently completed mortgages for include a 13.5 million euro mortgage in Spain on a beautiful property over a 15 year period fixed at just 1.1%. This was virtually free money. And in the UK they have also completed a loan of 18 million pounds at 65% loan-to-value on a five-year term fixed at 1.15%. So virtually mirroring those historically low interest rates that are being seen on the European continent in places like Spain and France.