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October 2010

A TALE OF QE
Her Majesty the Queen recently launched the latest £365M luxury liner in the Cunard fleet and named her Queen Elizabeth (QE3).  The first liner launched in 1938 cost £5M.  Her Majesty’s Government after spending £200BN on QE (Quantitative Easing) is now considering tickling the economy with QE2 to the tune of a further £50BN.

The philosopher Hegel made the famous remark that “history repeats itself” only for Karl Marx to embellish the statement to – history repeats itself “the first time as tragedy, the second as farce”.

In the 1970’s the UK government cranked up the printing presses; in 1972 the Government increased the money supply by 30% which lead to inflation of 9.7% that year, 16.5% in 1973 and a more alarming 26.5% in 1974.  This represented 52.3% in three years and the annualised rate for the 70’s was about 13% p.a.

At present we are assured by government economists that QE is being proposed as a means of fighting deflation, time will tell if the Karl Marx farce is to follow?

RETURN TO TANGIBLE ASSETS
What we are experiencing in the Mayfair property market is buyers looking to bricks and mortar as a tangible asset class for hedging against inflation.

One of the benefits of longevity in the Mayfair property market is that we are asked to sell properties that we had previously sold decades ago.  Recently we inspected an apartment we marketed in 1982 at £325,000 for a 999 year lease – today with a 971 year lease it is worth £3.25M.

The shrinking buying power of the £ through inflation combined with the decreasing value of sterling against international currencies has brought about this remarkable return over 28 years.  Wetherell have the opinion that in years to come we will look back on 2010 Mayfair prices and say “Gosh, that looked so cheap!”

STOP PRESS
Grosvenor Square – A large lateral apartment of 5,200 sq.ft. in Grosvenor Square on a 999 year lease @ £15M.

Culross Street – A low built house with atrium and garage @ £8.5M.

Royal Institution – Penthouse in London’s first one way street. For Rent @ £815 p.w.

“The concept began with good intentions. Albemarle Street in Mayfair became uni-directional in 1808 when crowds attending Samuel Taylor Coleridge’s lectures at the Royal Institution made traffic-planning necessary.”

Shepherd’s Place – 2 bedroom flat @ £615 per week.

News – The US Embassy is currently erecting a statue of Ronald Reagan on the south west corner of Grosvenor Square to join Eisenhower on the north west corner.

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