The world’s wealthiest individuals have long been clear about the qualities they look for in city homes, and these properties look much the same across the globe, but their criteria for country retreats is less well known. Estate agents call this market “prime rural” and say it has major growth potential.
“Entrepreneurs with global lifestyles have one or two city homes each but may buy several rural retreats around the world,” says Robert Green, of Abercrombie & Kent International Estates. “It’s a relatively untapped market.”
Green and others are encouraged by growing international demand for rural homes. Estate agent Knight Frank says 55 per cent of its £5m-plus UK estates – mostly in Scotland or the greenbelt around Greater London – were bought by overseas buyers in 2012, up from 40 per cent in 2011 and just 20 per cent in 2002. Last year 25 per cent were bought by east Europeans while west Europeans accounted for one in 10 purchases.
Lower down the price scale there has also been increased international interest. Savills says that in 2012, some 28 per cent of its country homes that sold for £2m-plus went to foreign buyers. In 2002 the figure was 14 per cent.
Other countries show the same trend. Wealthy buyers from the UK, Italy and United Arab Emirates are buying heavily in Kenya, particularly at prime Indian Ocean resorts, where average prices rose 10 per cent in 2012, according to Knight Frank. The previous year those same locations saw 20 per cent price rises. Meanwhile, agents selling waterfront estates on the Cote d’Azur in France say 70 per cent of buyers are non-French, up from 40 per cent in 2000 when most overseas buyers were British. Today, the majority are eastern European, Scandinavian and Chinese.
To be included in this burgeoning prime rural market, agents say homes must meet four criteria.
First, they must be within a few hours’ travel time of a city where buyers do business and, usually, have a property or two. A league table of cities with dollar millionaires, from business consultancy WealthInsight, puts Tokyo top with 461,000, followed by New York (389,000), London (281,000), Paris (219,000), Frankfurt (217,000) and Beijing (213,000). Four other Asian cities complete the list. The equivalent table for the world’s billionaires has New York first, followed by Moscow and London. Asia, including Istanbul, again makes up most of the remaining slots.
So for wealthy buyers operating in New York, a prime rural weekend or vacation retreat is likely to be in the Caribbean or the US itself. The wealthy businessmen in Europe will head to the Scottish Highlands, southern France or Tuscany in central Italy. Meanwhile, the Asian-based buyer will look to the Australian Bush or coast, or New Zealand.
“The property will be near an existing airport or will have land and consent for a private air strip or helipad. Speed and accessibility are key,” explains David Adams of John Taylor, which sells top-end real estate across western Europe.
Second, any prime rural property and its land must be “best in class” with the finest house, coveted grounds and contemporary amenities.
In the UK “perfection would be an architecturally significant house, set in great parkland and offering first-rate sporting facilities, but this is a rare combination,” says Alex Lawson of Savills. In Spain or Australia, a prime rural property may be more basic: water and electricity supplies across thousands of acres would make an estate rare and desirable. In some locations a plot may be small but still stand out from the crowd. “Villas on the Caribbean island of Mustique, for example, have little land. So the odd one with two or three hectares is extremely special in such a market,” says Edward de Mallet Morgan, of Knight Frank’s international division.
A prime rural home’s third defining characteristic is complete privacy. This may mean a buyer will want to “control the view”, estate agents’ jargon for owning everything they see from their home, even if it means buying 1,000 acres of surrounding countryside. The coastal equivalent means buying an island or a site far from cruise ship ports, public coastal paths or popular sailing estuaries.
Fourth, a prime property must play to what estate agents delicately describe as “buyer background”, or what the rest of us call “old money” and “new money”.
“New money buys rural property for investment, old money buys for its own use,” says David Forbes of Savills Private Office, a consultancy for wealthy buyers and sellers. “Asians buy agricultural land for investment but don’t have a culture of big weekends out of the city. Americans, Australians and Europeans have a long heritage of country weekends and will put a shoot or horses on land for their own use.”
Agents say Asian buyers often follow pension funds, which have championed rural investment in recent years. The Land Matrix Partnership, a consultancy, says up to $15bn of pension fund investment is concentrated on farmland worldwide. Savills says European, South American and African farms are particularly popular because entry costs are low and amenity values high, with the potential for future income via crop expansion.
New money is also influenced by fashionable tastes and western-style aspirations. “Many Europeans believe places like the Cote d’Azur are now too crowded and poor value for money. So they look at well-connected alternatives, like Languedoc, while Asian buyers happily still pay top dollar for Cap d’Antibes or St Tropez because they’re famous places,” says Abercrombie & Kent’s Robert Green.
Similarly, he says, the Chinese have fallen in love with wine, “so demand and prices for vineyards, anywhere in the world, are rising”.
There is no official data on French vineyards in foreign ownership but the first Bordeaux château was bought by a Chinese national in 2008. By late 2011 there were six and now there are at least 20. Last year, the first Burgundy vineyard was snapped up by a Chinese buyer. Vineyards by Christie’s International Real Estate opened in Hong Kong last month, offering advice, translation services and site visits for prospective buyers.
The prime rural concept – embracing not only vineyards but equestrian properties, waterfront resorts, ranches and country houses – is one we will hear more of in future. WealthInsight predicts that by 2020 the US alone will have seven-million dollar millionaires, while today’s billionaires – some 1,500 worldwide – may quadruple in number. That is a lot of extra demand for places offering somewhere to sail, ride or simply admire the view. Clearly, the prime rural property boom has only just started.
● Mandalay House, northern Queensland, Australia, A$25m ($23.3m)
Why An oceanfront property featuring 28,000 sq ft of living space and a private marina offering easy access to the Great Barrier Reef. Close to Hamilton Island airport, which is a three-hour flight from Melbourne.
Who Aylesford International, tel: +44 20 7349 9772
● Grizzly Creek Ranch, Montana, US, $25m
Why A ranch offering 20,000 sq ft of living space set in 1,967 acres. Space for a private airfield. The property is 25 miles from Livingstone, which is a four-hour flight from New York.
Who Abercrombie & Kent International Estates, tel: +44 20 7190 7714
● Plettenberg Bay Game Reserve, Western Cape, South Africa, R125m ($12.6m)
Why The managed 3,200 acre estate has a 10-bedroom house with staff quarters. Plettenberg Bay airport is nearby. The property is a 65-minute flight from Cape Town.
Who Sotheby’s International Realty, tel: +27 44 533 2529
● 18th-century house, Var, France, €9.5m
Why This six-bedroom bastide is set in 425 acres which features formal gardens, private woodland and a vineyard. There is also room for a helipad. Nice airport is 120km away.
Who Knight Frank, tel: +44 207 861 1727
● Modern house in pine forest near the Rublevo-Uspenskoye highway, Moscow, Russia, Rbs445m ($13.7m)
Why A 12,000 sq ft, four-bedroom house, 15km from central Moscow. It has only two acres of grounds but that is what Russians class as rural. The property comes with high-spec security, staff accommodation and what the selling agent describes as “a mini-zoo”.
Who Savills, tel: +44 20 7016 3871
● Gledfield Estate, Sutherland, Scotland, UK, £8m
Why An eight-bedroom principal house, plus a further eight houses and cottages on a 6,900 acre estate. Country pursuits dominate, including grouse shooting, duck flighting and salmon fishing. There is also the potential for pheasant shooting.
Who Savills, tel: +44 131 265 2044