LIVINGROOM ESTATE AGENTS
The Channel Island Market Review ISSUE 1 OCTOBER 2019
ISSUE 1 THE CHANNEL ISLAND MARKET REVIEW
Foreword What do you think of when you think of the Channel Islands? Are they idyllic escapes? World-class international finance centres? A cultural amalgam of the best of British and French? For us the Channel Islands are home. As the only pan-Channel Island estate agency that was founded in the islands we’re uniquely placed to offer a view not just on the local property markets but also island life as a whole and what makes the islands tick. That’s exactly what this review sets out to do: provide an overview of the markets based on the knowledge and experience of the Livingroom team who know the Channel Islands inside out. Of course we in the islands aren’t isolated from the wider world and the headline-grabbing news here in the first half of 2019 has been Brexit. What the United Kingdom’s departure from the EU is eventually going to look like, and indeed when it’s even going to happen, is (still!) up in the air at the time of writing. But what has become increasingly apparent over the past year is that the Channel Islands are effectively weathering the storm of uncertainty to stand as beacons of stability in turbulent times. Despite the lack of clarity in the UK the islands continue to maintain good relationships with the UK Government and its European counterparts. We continue to facilitate work into the UK and into Europe. We continue to attract new residents from around the world. We continue to be seen as centres of excellence for financial services. The islands represent a stable option for building a fulfilling, safe and secure future and more and more people are realising that. Through the course of this review we explain how that positivity is impacting the islands’ property markets and affecting prices, as well as getting input from our team of property experts on the nuances of each island and what the immediate future holds. In uncertain times it can be hard to find positives to cling to; we’re lucky to have plenty of positives in the Channel Islands and are excited to share them with you over the next few pages.
SIMON TORODE FOUNDER, CEO LIVINGROOM ESTATE AGENTS
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Guernsey With the UK in the grip of Brexit uncertainty since the referendum in June 2016 we wanted to examine the figures since that time to work out how Guernsey’s property market was faring. Anyone with right of abode in the UK or EU (and further afield if the necessary immigration criteria are met) can move to Guernsey and buy a property on what is known as the Open Market – designated properties that represent about 7% of the total housing stock – and local people also have the right to buy Open Market properties as well as Local Market ones. The state of the Open Market is therefore a great barometer of the health of the market overall. Figure 1 shows how the number of Open Market transactions has increased since 2016. Of course not all of these transactions are attributable to Brexit but it suggests that the Guernsey lifestyle is an ever-more attractive one. The market as a whole is showing signs of healthy activity, with modest price increases recorded in the last two years in the Open Market (Figure 2) and the Local Market holding steady after a period of adjustment to what we regard as a more natural level for prices after the highs of 2014 and ’15. This adjustment, following consistent advice (at least from Livingroom) to vendors to price more realistically, is also seen in the segmentation of Local Market transactions (Figure 3) and, especially, in the reduction in the number of transactions for more than £999,001. These results show that there is excellent value to be had in the middle price bracket and that there is also great value for local people buying in the Open Market, as well as reflecting that move to more realistic pricing of properties.
FIGURE 1
FIGURE 2
FIGURE 3
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Expert view The number of Open Market transactions in recent years points to a market that is more buoyant than ever before and this is especially remarkable considering the slow-down and stagnation witnessed in premium UK regions such as London, Surrey and Cheshire. Certainly the UK property market is being affected by a ‘wait-and-see’ approach prompted by Brexitbased uncertainty; Guernsey has escaped this hesitation and the evidence we’re seeing shows that the island is still seen as a location for a secure investment in a healthy market. It’s certainly our experience that properties move quickly when priced sensibly, something Livingroom is always realistic about when providing free valuations for vendors. This means that buyers have to act quickly to secure an Open Market property but doesn’t necessarily mean that there’s no value in the market.
Indeed, the Open Market is also open to local Guernsey residents and many find that there is some cross-pollination between the top end of the Local Market and the lower end of the Open Market. The Open Market boasts some of the island’s best homes and it’s fantastic to work in such a dynamic arena. The data shows that the market is in a great position and it’s always reassuring to see our day-to-day experience of selling and letting Open Market homes backed up by facts and figures.
JASON HYLAND OPEN MARKET DIRECTOR GUERNSEY
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PETIT PORT, GUERNSEY
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Jersey The Jersey property market has made national headlines earlier this year as the average price surpassed the London average for the first time. Figure 1 shows that the average price in Jersey has soared by more than 10% in less than three years, which may seem like a modest figure but leaves the average price at over the half-a-million-pound mark in the second quarter of 2019. 2018 also saw a large increase in the number of transactions over £1m compared to 2016 and 2017, which were broadly similar (Figure 2). 157 transactions at more than £1m show the sheer number of properties at the top end of a healthy market. There are some truly stunning properties in Jersey that support this top bracket so it’s no surprise that prices have climbed as they have in recent years. This is a point of distinction to Guernsey’s market (Guernsey’s Local Market recorded 22 sales over £1m in 2018) and shows the availability of premium property in Jersey and the impact on pricing of a single market system, as opposed to Guernsey’s dual Open and Local Market system. The number of high-quality, top-end properties available in Jersey is a significant pull factor in attracting HNW residents to the island as they are safe in the knowledge that they can move over and enjoy a similar standard of living to what they are used to. Indeed, the number of transactions in the £1.5-2m and over £2m brackets has almost doubled in three years (Figure 3) which demonstrates fantastic faith in the market. Growth in the market is no bad thing but a period of accelerated growth has to be treated carefully and considered in a broader context. What is certain is that Jersey continues to be a secure environment for investing and a thriving society to live in if the uncertainty in the UK just becomes a bit too much.
FIGURE 1
FIGURE 2
FIGURE 3
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Expert view The Jersey property market is in a healthy position but vendors shouldn’t treat the situation as carte blanche to price as they desire. Sensible pricing is still the best way to achieve a sale and, when necessary, we advise our clients that getting over that magic £1m mark isn’t always the end goal.
We have first-hand experience of a slight slow-down at that end of the market due to unrealistic pricing and as estate agents we have a responsibility to advise our clients to price appropriately to keep the market moving.
Another issue we’re experiencing in Jersey is a lack of properties in the under-£1.5m bracket. The market is so active at that price point that properties are no sooner listed on our website than viewings are being arranged and keys are changing hands. This is driving up prices and contributing to the active market but, again, we’d always advise pricing realistically. Vendors shouldn’t be blinkered by the movement lower down the market and should heed the advice of the experienced and knowledgeable Livingroom team. We only opened our Jersey doors in October 2018 and have already completed a considerable number of sales for our clients – testament to what a top-quality team, exceptional client service and excellent communication with clients can achieve. ANGELA BINNIE RESIDENTIAL SALES JERSEY
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PORTELET, JERSEY
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Stability breeds stability In economic circles, there is a well-known and accepted theory called the ‘Financial Instability Hypothesis’ which states that, contrary to what one might think, a stable economy actually breeds instability. American Economist Hyman Minsky outlined the theory that, in a stable economy, people are more likely to take risks, which in turn causes financial instability, potentially leading to a crisis. His theories were largely ignored until 12 years after his death, when the 2008 sub-prime mortgage crisis hit the US, its impact ricocheting around the world. Looking at the UK’s post-war boom and bust cycle, this theory certainly makes sense and the Channel Islands can never claim to be immune to recession or financial crisis. However, we have weathered the post-war financial storms better than a number of our counterparts. Why is that the case and what are the trends we are seeing in each island? We spoke to Locate Jersey and Locate Guernsey to find out more…
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Locate Guernsey How do you put a value on safety, security, stability? Living in Guernsey, it can be easy to take for granted the fact that many of us still don’t lock our front doors, and leaving your iPad on show in your car isn’t going to mean you come back to a smashed window and a stolen device. It’s absolutely unique and is in huge contrast to the rest of the world.
As mental health issues have come to the fore, we have seen more and more younger families relocate. They’re aware of the need to see their children grow up and don’t want to miss out by spending long hours commuting. All of the schools in both the private and public sector are incredibly busy so the signs on all sides are very positive.
For the HNWIs we work with at Locate Guernsey, safety means everything. Not just safety to wear their jewellery and drive their supercars without fear of theft, but the safety and security of knowing that an investment in Guernsey is an investment in a stable and well-regulated economy.
We’re a well-regulated jurisdiction with political and economic stability, control over our own borders and we are not dictated to by the EU. Moving here is extremely simple and straightforward, with no minimum revenue contribution required. If you can afford to buy an Open Market home and hold a British or EEA passport, you can come to the island. It’s as simple as that. There are also options available to those who require immigration clearance. Our open doors policy makes it an attractive proposition and many who come to Guernsey on the premise of just ‘trying it out’ absolutely love it and never leave.
The Open Market in Guernsey is more attractive than ever for people relocating. Values have been corrected from the highs in the market several years ago, which led to a degree of stagnation. We are seeing plenty of movement of realistically priced properties and a good flow of stock. Rules introduced by the States of Guernsey mean that anyone spending £1.32m or more on a home will benefit from a tax cap of £50,000 per year for four years. For HNWIs, the thought that they will spend just £200,000 in tax over four years is a huge benefit, and we have seen it make a tangible impact on the Open Market. It’s not only driven purchases; it has also driven sales of those homes that were in need of a little more work. Even in the times of a slower Open Market, a well-located, well-presented and realistically priced home would generally sell quickly. The housing stock which struggled was the older properties, in need of some TLC. Now, we’re finding that the savings on tax are incentivising people to buy an older property and make their mark in renovating it. This is doubly good news, as the stock will improve overall and the local economy will benefit as money is ploughed into the island through the construction industry and associated support services. Our basic premise is that Guernsey is better for you. It’s a better life and less taxing – mentally, physically and in monetary terms.
I truly believe that this is Guernsey’s time. In eight months of an Open Skies policy, we have seen eight new air routes launched, including the return of the Heathrow link. Compare us to an area in England of the same size, such as Paignton in Devon, and we are incredibly well-connected. You can be in central Southampton or Manchester for a 9am meeting, London for 9.30am. That’s why families and couples who move here say it’s even better than they imagined. They tell us they feel welcomed, and find there is much to do. Moving to Guernsey is as much about mind set as location. We don’t have a huge shopping mall and a multiplex, but we do have a plethora of beautiful beaches, high-end restaurants, fantastic career opportunities, top class schools and air links that can get you to the heart of the UK’s biggest cities in less time than it takes to travel across London. We really believe in the island and its future. Jo Stoddart, Director of Locate Guernsey
Guernsey... the island that’s better for you Thinking about moving your family offshore?
Recently sold your business or about to?
Guernsey has so much to offer your new life In under an hour from the UK and Europe, it is a beautiful island with a big heart. An absolute gem surrounded by stunning scenery, golden sandy beaches, captivating cliffs, and crystal clear aqua-blue seas. Conveniently, nowhere is more than a 20 minute commute away. Guernsey offers everything you could wish for to make a better life for you.
Working for you World-class financial, professional and legal services centre Well regulated, secure, internationally recognised and compliant jurisdiction Strong digital and telecommunications infrastructure for connectivity Leading jurisdiction for private equity and home to ‘The International Stock Exchange’ Strong investor networks helping scale-up businesses Excellent connections to UK airports and ports, many within an hour
To start your journey, call the Locate Guernsey team Scan the QR code to find out more
on +44 (0)1481 743834, email enquiries@locateguernsey.com, or visit locateguernsey.com
Looking for a more relaxing pace of life?
After a fantastic work/life balance?
Less taxing for you No minimum revenue levels to gain residency Independently governed, politically and economically stable, low tax jurisdiction
Want to live somewhere safe, secure and friendly?
Island life for you A family-orientated, friendly, safe and secure community Fantastic work/life balance
Most companies pay a standard tax rate of 0%
Excellent education and healthcare systems
Tax regime compliant with OECD standards of information exchange
Wide range of sports and outdoor activities available including golf, tennis and rugby
No IHT, CGT, Wealth, Gift or Estate Tax or VAT
Fresh air, amazing beaches, cliff walking and island-hopping experiences
Flat rate of 20% Personal Income Tax Purchase of an Open Market Part A property at a cost of £1.32M or above during the first 12 months of residency entitles the purchaser to a tax cap of £50k/annum for up to four years
Follow us. Search: LocateGuernsey
Living in an Open Market Part A home enables you and your family to live and work in Guernsey indefinitely English speaking – same time zone as the UK
A better life for you
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Locate Jersey The team at Locate Jersey offers a comprehensive, independent, confidential and free service to support companies and families through the process of moving to Jersey. Incoming families qualifying as High Value Residents are expected to lease or purchase properties in excess of £1,750,00 (£900,000 for apartments). In 2018 High Value Residents purchased in excess of £83m contributing over £4.5m in Stamp Duty. Government of Jersey statistics show that the market for properties above £1.5m continues to grow apace and, in fact, the number of transactions in both the £1.5-2m and £2m and above bracket – the prime target for those individuals we help to relocate - has almost doubled in three years. The top end of the market is growing significantly. When you compare that to other jurisdictions and prime property in the UK, it really is a vote of confidence in Jersey and a signifier of the island’s continued success. So what of this word ‘stability’? It’s undoubtedly a driver. The island’s independent government is in reserve, with no major borrowings. We have an independent legislature and judiciary and a low tax regime alongside a well-respected and highly regulated finance industry. All of these attributes lead to stability in the economy, which leads to stability in our residents. Simply put, when people move to Jersey, they stay.
Why? Well of course, there are the lifestyle factors. Beautiful landscapes, beaches, connectivity to the UK, beneficial tax rates, great schools – these are all of the ‘added extras’ which once people experience, they find so hard to leave. But even before they get here, our application process means that people have to really think about and plan out their move to Jersey. They don’t tend to buy a home with the aim of ‘trying out’ the lifestyle for a short while: when they make the decision to move to the island, it generally has to be a long-lasting commitment. That’s why the very few people who do leave usually do so for reasons beyond their control, such as health or family issues. Last year, we helped 15 families relocate and 22 businesses were approved to operate in Jersey, creating an estimated minimum of 192 job opportunities. The wider impact of our work is becoming more tangible and will only continue to grow as the demographic of our high value residents continues to become younger. Taken on a five year average, 71% of the people we have relocated have not yet celebrated their 60th birthday. We’re attracting people to the island who are both economically active and keen to immerse themselves in island life, so the community as a whole is benefiting alongside the economy. The comment we hear most often from clients is ‘we wish we had moved here sooner,’ and that reflects the confidence we have in the island. We’re looking to the next five years with excitement that our beautiful environment and strong economy will continue to attract quality individuals looking for a stable base to call home. Kevin Lemasney, Director of High Value Residency, Locate Jersey
With a long-standing reputation for attracting successful companies and families to its beautiful shores, Jersey is a location for those who want to work in a thriving, international centre of excellence, but who also seek a life of more than just work.
The team at Locate Jersey offer a comprehensive, independent, confidential and free service to support companies and families through the process of moving and setting up their operations in the Island.
locatejersey.com
Jersey has a friendly, safe, cosmopolitan community, where traditional values sit at the very heart of our contemporary lifestyles. A beautiful island setting with stunning beaches, coastline and countryside, Jersey offers a wealth of leisure and sporting opportunities. In Jersey, a work-life balance really is achievable. Finding a location that benefits your business and your family might be your principal driving force, but choosing a place to become your home is about much more. With some of the lowest direct taxes in Europe, residency in Jersey works for your wealth and your business but importantly, the island also offers an enviable quality of life for you and your family. Jersey welcomes enquiries from high-value activity businesses and economically active high-value individuals.
Jersey. For business. For life.
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Residency in Jersey
Professionals are choosing to relocate not only their businesses but also themselves and their families to Jersey. Key factors in the relocation decision-making process include Jersey’s standing as a well-regulated International Finance Centre, the safety and privacy the island offers, its corporate and personal tax environment and easy access to the UK and beyond – London is just a 40 minute flight away, 11 times a day. For families, Jersey’s appeal also lies in its high standards of education, health and leisure facilities, a rich rural heritage, exceptional produce from land and sea, first class range of restaurants (two of which are Michelin-starred), and an ability to be home, on the beach or in breath-taking countryside within minutes of leaving the office.
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Business Sectors
Complementing Jersey’s well established financial services sector is a broader range of sectors including mining and natural resources, digital, FinTech, e-commerce and fund management. Due to Jersey’s financial expertise, stable and resilient communications infrastructure and its position as one of the first jurisdictions in the world where every home and business is connected to a 1 gigabit fibre network, there is continued interest in Jersey from a broad range of companies and innovative startups. Executives and entrepreneurs are increasingly being attracted by Jersey’s financial expertise, access to capital markets, and business support that can both protect their worldwide assets and help their businesses grow.
The range of properties available is as diverse as the Island itself, from luxury waterfront apartments and historic Cod Houses to picturesque granite farmhouses.
Locate Jersey provides free advice and support to you and your business in becoming resident in Jersey. Please contact Kevin Lemasney, Director, High Value Residency on +44 (0)7797 783457 or email k.lemasney@gov.je
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October 2019+
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The Last Word As I sit down to write this in October 2019 and reflect on the figures from the first half of the year, I’m struck by the fact that the trends we’ve identified in each island are holding true. Without having seen the official Q3 figures from the two governments yet, our experience is that the price recovery of the past couple of years in the Channel Islands has continued over the third quarter of the year. Furthermore, with the UK still in the grip of uncertainty, even as the Brexit deadline looms, the islands continue to stand out as jurisdictions that embody stability. One thing that has changed from our analysis of the first half of 2019 is that there has been a slight pick-up in the prime Central London housing market, which bodes well as London activity is often a key indicator in advance of greater UK property markets. The ripple effect from London spans HNW communities such as the Home Counties and further north towards Cheshire and Yorkshire - where a notable amount of CI residents have originated from. Whether this is down to renewed confidence in the market or buyers and vendors feeling they’ve sat on their hands for long enough relative to Brexit uncertainty is impossible to say – but it’s certainly the case that the wealth has always been present for high-level transactions, it has just been frozen by political uncertainty. Without a crystal ball, it has become increasingly apparent that financial advisors, trust companies and accountants have been hesitant and have suggested that their clients should ‘pause’ planned transactions until greater political surety has been secured. What has been comforting is that UK political uncertainty has only helped to highlight the Channel Islands as hugely desirable and stable places of residence. After all, no astute financial advisor can dismiss the financial benefits of Channel Island residency coupled with the safety and security that
the islands offer when so many countries are facing such turbulent times. Our status as a non-EU domicile also removes an element of the unknown. As Channel Islanders, we have already proven our ability to do business on a global scale without being part of the EU and we continue to, without compromise. We have been working with potential buyers of considerable means visiting the islands as part of their ‘emergency planning’ should they be unhappy either with the outcome of Brexit or a much-mooted general election. This is understandable and demonstrates that the islands are in UK citizens’ minds as they consider their futures. Locally, we have witnessed high-value properties coming onto the market in both Guernsey and Jersey and, as always with Livingroom, a greater degree of this activity happens discreetly. These properties form part of our Private Collection, created from long-standing relationships where the vendors chose Livingroom for utmost levels of discretion. Island life clearly still has a fantastic appeal and, as the only Channel Island estate agent, Livingroom is proud to offer the complete spectrum of residential property within the islands – from affordable homes to the islands’ finest properties. Our most valuable current property is listed at £26.95m, demonstrating that the high-value homes are available in the islands. Although the message is hugely positive for Channel Island residents, the market still requires vendors to remain competitive and agile. There is no room for complacency – just a little more activity to try and harness. SIMON TORODE FOUNDER, CEO LIVINGROOM ESTATE AGENTS
Guernsey office T (0) 1481 715555 E INFO@LIVINGROOM.GG W WWW.LIVINGROOM.GG A LIVINGROOM HOUSE, NORTH CLIFTON, ST. PETER PORT, GUERNSEY, GY1 1JR.
Jersey office T (0) 1534 717100 E INFO@LIVINGROOM.JE W WWW.LIVINGROOM.JE A GROUND FLOOR, CHANNEL HOUSE, GREEN STREET, ST. HELIER, JERSEY, JE2 4UH.