At the end of 2020, it became known that the house in London at 221B Baker Street, in which the detective Sherlock Holmes from the works of Sir Arthur Conan Doyle once “lived”, has since 2005 belonged to the daughter and grandson of the former President of Kazakhstan Nursultan Nazarbayev. According to British media estimates, a two-bedroom Georgian apartment is worth about £ 1.7 million on the market today. The house-museum belongs to the so-called trophy, or collection, real estate, the owners of which, due to the high value of the assets, prefer to remain unnamed. But how profitable is it to invest in such housing?
According to experts, the so-called trophy houses, to which the house of Sherlock Holmes can be safely attributed due to the popularity of not only the hero, but also the location itself, are objects that combine historical value, outstanding architecture, favorable geographical location and other unique advantages compared to conventional buildings. Because of these characteristics, such properties are often compared to works of art and referred to as “passion investments”.
Accordingly, it is quite difficult to find such a trophy property. “This category falls under 1–2% of the total supply on the market,” explains the Metrium Group company. “These are penthouses, apartments in historic buildings or buildings built by world-renowned architects, objects with breathtaking natural views or panoramic views of well-known landmarks, houses of writers.”
In the same class of real estate, houses are usually ranked not only of literary, but also of movie characters. For example, the house in Chelsea, London, where the famous James Bond lived in the works of Ian Fleming, was put up for sale in 2019 for 6 million pounds. Buildings from horror films are also in demand: in 2013, an initially unremarkable typical two-story mansion in West Hollywood went under the hammer for $ 2.1 million – the house gained fame after the release of Nightmare on Elm Street about Freddie in 1984 Kruger. Those who are 822 sq. m closely, they can settle in Dracula’s castle, the Romanian fortress Bran. True, this cultural site will cost 47 million euros.
Experts note that traditionally trophy real estate is sold at a premium to the market. According to Vera Stefan, director of advertising and PR Level Group, linking an object with famous names can increase its price by an average of 30-50% compared to peers. For example, an apartment with an area of 90 sq. m on the emb. Kutuzov, 32, in St. Petersburg, where the Pushkin family lived from 1834 to 1836, was put up for sale last year at a starting price of 55 million rubles. For comparison: in the same building, a four-room apartment with three times the area (297 sq. M.) Is being sold today for 29.9 million rubles. “Hans Christian Andersen,” Stefan continues, “has come a long way from a penniless writer to a well-to-do man, and during this time has changed several dozen addresses in Copenhagen. And now local realtors joke that no one has done more for the Danish real estate market than him, because his name has increased the value of a large number of houses. “
Trophy investment is especially in demand during periods of economic turbulence, analysts point out. “Collectible real estate has always been in high demand during periods of market volatility. Prices for it almost never fall, even in a general downtrend. For example, in London, against the background of a decrease in the cost of premium housing by an average of about 18%, the prices for trophy options fell by only 1%, ”notes Mikhail Smirnov, General Director of Federation Tower CJSC.
However, this investment cannot be called absolutely risk-free. First, the cost of such housing cannot be determined on the basis of a comparative valuation method simply due to the lack of a similar supply on the market. “The price of houses in which famous people lived is formed due to the fact that the property itself is unique and also carries the flavor of a particular era. Many clients value the cultural and historical heritage of a building when buying real estate, ”says Marina Shalaeva, director of the foreign real estate and private investment department at Knight Frank.
Thus, the trophy assets cost, in fact, what the buyer is willing to pay for them. In 2018, the house in which J.K. Rowling’s character Harry Potter spent his childhood sleeping in a room under the stairs was sold for £ 440,000 – £ 160,000 cheaper than it was bought in 2016. The new owner confirmed to the British media that it was not is a fan of the teenage wizard saga.
Secondly, there are a huge number of pitfalls related to the renovation and redevelopment of collectible houses. “Sometimes repairs and reconstruction can be more expensive than the object itself, due to a huge number of restrictions, especially if the building is located within the city and is an architectural monument,” says Shalaeva. – In central London, Paris or Barcelona, many work permits must be obtained and all internal changes must be agreed. It happens that even the overlap cannot be changed. In addition, there are usually small bathrooms and lifts in beautiful historic buildings. And even if it is possible to change the internal organization of space and communications, common areas such as elevators and elevator lobbies are much more difficult to redo. Sometimes they are abandoned, and, as a result, the object no longer meets modern standards and customer requirements. “
Thirdly, the historical halo around an apartment or house does not always give the multiplier effect that the investor is counting on. The fact is that the uniqueness parameter can be interpreted in different ways, especially when it comes to the place where a famous person lived or worked, Smirnov argues. “In one case, we can talk about a genuine rarity – for example, about one of the most expensive estates in the world – Les Cedres, which was owned by King Leopold II of Belgium. In another, an apartment may be conditionally associated with a famous person – if, for example, it is one of 10 households that belonged to him, ”he says.