Wetherell

Laura Dixon & Judith Heywood

Bonus season has dawned again. Reports from agents in London’s best postcodes reveal that just as prices have edged back up to the highs of 2007 and sealed bids have again become commonplace, so too the annual contest for the best homes for finance kings has been revived.

Agents feared that the ritual, which boosted the tempo and prices in many a winter market, had become a relic of the boom time. But the Centre for Economics and Business Research predicts that bonuses will total £6 billion this year, up 50 per cent on last year (but still substantially down on the £10.2 million paid out for 2007). Much of this will be doled out in shares or other non-cash forms — but agents say that City-based buyers are lining up to view homes ahead of a new-year payout. They may be financial sophisticates but few can ignore the security and inflation hedge offered by property, especially in a fast-recovering London market.

Ed Mead of Douglas & Gordon, said that interest would be concentrated in the price range of £1 million to £2.5 million, down from the more typical bonus-fuelled price range of £3 million to £5 million, but he said that the bonus effect would be accentuated this year because the market is so thin and transactions so low. “There is no more stock coming on to the market to satisfy these buyers, so it might even lead to an uplift in prices.”

Peter Rollings, of Marsh & Parsons, said that the uplift was being felt in every price range. “City buyers are now feeling secure in themselves. We are going to see a flurry of fairly big deals happening in Kensington and Chelsea, but the activity is at all levels down to the junior banker who has a bonus of £200,000 and wants to upgrade from a one-bed in Clapham to two beds in Fulham.”

Savills, the agent, confirms that the chief beneficiaries will be those family areas in southwest London which, as previously reported in Bricks and Mortar, have led the recovery this year and — as Jonathan Hewlett of Savills, said — make up the “mid-prime areas that have traditionally attracted mid-management-level City workers and the young banking families”. He also expects cash to flow through to Islington, Hampstead and even Canary Wharf, which the agent Hurfurd Salvi Carr recently reported had belatedly begun to catch up with the recovery as City confidence grew.

Some observers have warned that the recession has changed bonus buyer habits. David Adams, of Chesterton Humberts, said that more bonus money will this year be spent paying off debt “rather than mortgaging to the hilt for a trophy property”. He predicts a greater proportion of bonus-funded buyers in areas such as “Parsons Green, Fulham, which offer 23 to 35 per cent more space than Kensington flats for equivalent prices. Prices for these homes have already recovered to peak 2007 levels.”

But one property likely to lure the City buyer with the best bonus in the bank is 48 Upper Grosvenor Street, where from the bath it is possible to see — just over the window ledge — the Art Deco façade of the American Embassy, guards positioned around Eero Saarinen’s concrete building. As its view suggests, this property is situated in the heart of Mayfair: two blocks from Oxford Street and minutes from Hyde Park.

The house, which is on the market for £17.5 million, is renowned as much for the sexual escapades of one of its former occupants as it is for its location. Margaret Campbell, the Duchess of Argyll, popularly known as “the Dirty Duchess” for her role in one of England’s most infamous divorce cases, lived here, entertaining visitors such as Noël Coward, Cary Grant and Anthony Eden. It was in the bathroom that the Duchess was photographed in a mirror, naked apart from her pearls, in a compromising position with an unidentified man. Her husband used the photograph in evidence when he filed, succesfully, for divorce in 1963. The Duchess moved out of Grosvenor Street and the house passed to various owners, before falling into disrepair.

Property manager Simon Rusk, the owner, bought the house for £2.5 million three years ago, but after spending as much time renovating it, he has decided to move to the country.

The 1727 house, built over six floors, has a gym and cinema but only four bedrooms. Rusk has fitted the house with the latest technology, including temperature and security control measures that can be operated via mobile phone. Even City titans will find there are plenty of rival buyers. Jayne Weldon of Wetherell, the agent, said: “There are people who have the money to buy whatever they want. And they all want to live in Mayfair.”

This article was published by The Times on 23rd October 2009.  Please click here to view