London takes global top spot for luxury home sales

The super-rich bought more homes in London than any other city in the world last year, according to new figures from estate agent Knight Frank, with buyers lured by the weak pound and the end of the UK’s Brexit saga.

Buyers from around the world spent almost $4bn on so-called super-prime properties in the UK capital, which are classified as anything with a price tag of $10m or more. 

That is more than the total spent on super-prime homes in any other city last year, with London leapfrogging Hong Kong and New York, according to Knight Frank. 

Despite travel restrictions and the fact that the UK’s housing market was effectively locked down between March and May 2020, the number of sales above $10m in London last year was up on 2019, with Russian, French and Chinese buyers particularly active.

The influx of money from overseas came as many London residents looked to the suburbs and the countryside in search of more space in the era of homeworking.

“The story all last year was that people were moving out of cities. But quietly there were some big purchases taking place,” said Liam Bailey, global head of research at Knight Frank. 

In all, 201 super-prime properties were sold with an average price of $18.6m. In 31 of those transactions, buyers paid $25m or more.

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One of biggest sales of the year was the purchase of a £42m Belgravia mansion by British industrialist Sanjeev Gupta, revealed last month by the Financial Times.

Buyers of $10m-plus homes in London and elsewhere are a narrow, international set, motivated and constrained by entirely different factors to those that move the mainstream housing market. 

Where they choose to buy signals as much about the relative attractiveness of a city’s tax regime or its safety as a place to store wealth as it does about livability.

Despite the pandemic, the $19bn spent on super-prime properties across a dozen cities monitored by Knight Frank last year was just 5 per cent less than the 2019 total.

London’s attractiveness has been burnished by the conclusion of Brexit negotiations and the fact that average prices in the most expensive postcodes are down around 20 per cent from a 2015 peak, said Bailey.

Another large factor driving strong sales was the cheapness of the pound against the dollar and euro, he added. 

Super-prime sales in New York fell 48 per cent last year as wealthy buyers looked to sunnier coastal cities in the US such as Palm Beach, Los Angeles and Miami. 

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Trade in Hong Kong, which had the highest number of $10m-plus sales in 2018 and 2019, fell 27 per cent, hit by political uncertainty and tough coronavirus measures, said Bailey.

“There’s still a cachet to a London residence even if you’re not in it for months at a time. If you’re super wealthy you will have a plane, a helicopter, a superyacht and your place in London,” said Nathalie Hirst, a London-focused buying agent whose clients are hunting homes with a budget of up to £100m.

“I had clients predicting doom and gloom, Armageddon, but the property market has carried on,” she said.

Biden’s plans for a global corporate tax rate could make the world a fairer place

More than a decade has passed without any progress in bringing the global tax system into the modern age. But less than three months after taking office, President Joe Biden has raised hopes of a breakthrough, with proposals that could kill tax havens dead and force multinationals to pay a fairer share of tax.

The change in tone could not be more marked. With last week’s proposal for a global minimum corporate tax rate, Washington has turned away from years of economic orthodoxy that stretched back to the early 1980s and prioritised a neoliberal world vision — of free-market competition, government indifference and unblinking advocacy of globalisation.

Under proposals submitted to tax negotiators from 135 countries at the OECD, the Biden plan would force big companies to pay taxes where their revenues are earned, not where the profits can be shifted to. It would also establish a global minimum tax rate, agreed by the world’s biggest economies.

This is a powerful development. For years, big companies have weaved a merry dance through a broken patchwork of international tax rules, advised by an army of lawyers and accountants on where to locate to reduce their bills.

The free-market economists favoured by presidents past would have argued for the advantages of globalisation: cheaper products, more choice. But profit-shifting by big companies — turbocharged in the digital age, with its unparalleled ease of doing business across borders — has left government coffers increasingly short. According to the Tax Justice Network, the sums lost to exchequers around the world have risen as high as £311bn annually.

This comes at a time when Covid is driving up national debts to eye-watering levels. Public anger at tax avoidance, and demands on companies to pay a fair share, have also risen since the 2008 financial crisis.

US multinationals are serious offenders. The proportion of gross profits they shift into tax havens has soared from 5-10% in the 1990s to between 25% and 30% today.

In a race to the bottom designed to attract big companies to competing jurisdictions, the average statutory corporate tax rate across 109 countries assessed by the OECD dropped from 28% at the turn of the millennium to 20.6% in 2020. This was a tactic ostentatiously deployed by George Osborne, who cut the UK rate from 28% a decade ago to the current level of 19% — with little apparent benefit.

Some digital companies pay even lower global effective rates (an average of the tax paid across all jurisdictions a firm operates in). Recent figures show Amazon pays 11.8%, Apple 14.4% and Facebook 12.2%.

For tax campaigners, the Biden intervention is a moment of hope. But the fear among progressives is that defeat will be snatched from the jaws of victory.

For Biden, ending the race to the bottom would help his administration raise domestic corporate taxes from 21% to 28% without big companies threatening to up sticks and locate profits elsewhere.

Much negotiation still remains to be done, not least on the rate at which a global minimum tax would be set. Washington wants 21% but several nations have much lower rates. An agreement among EU nations would not be easy, as rates range from 9% in Hungary and 12.5% in Ireland to 33% in France.

Might the agreed rate be so low as to make the initiative meaningless? Might there be too many exemptions?

Possibly, but the hope is that, with the US on board and a warm reception from France and Germany, jurisdictions hosting a large enough slice of global economic activity will sign — effectively forcing compliance. After decades on the road to nowhere, global tax reform may at last be within reach.

Cinemas and streamers fight like Godzilla v Kong

Saviours come in all shapes and sizes, and this time the all-conquering heroes have taken the shape of a dinosaur and a giant ape. Godzilla vs Kong has smashed through the pandemic torpor and paved the way to recovery for what has been stuttering global box office.

In its first week of release, the blockbuster pulled in more than £205m internationally, making it the best-performing debut since the pandemic began by some distance.

Faced with finances stretched to breaking point, cinema owners will be breathing a sigh of relief, hoping that this success is proof that moviegoers haven’t been permanently put off the big-screen experience.

Hollywood studios have taken advantage of cinema lockdowns to experiment with putting some films straight on to streaming services, but this has not been considered a major success. In the US, the world’s biggest movie market, Godzilla vs Kong was made available on WarnerMedia’s HBO Max service at the same time as in theatres, and the big screen held its own.

The $48.5m take for the first five days in the US, with only about half of screens open, has been seen as redemption following the flat box-office performance of would-be saviours Wonder Woman 1984 and Tenet earlier in the pandemic.

However, Hollywood studios have succeeded in their ambition of shrinking the once-sacrosanct exclusivity period that theatres enjoy from many months to a few weeks. In reality, it has always been the case that most films make the vast majority of ticket sales in a short period after premiere.

The pandemic has provided an unprecedented testbed for studios and fuelled an enforced boom in home-based entertainment.Director Adam Wingard promised that his film would be the definitive “decider” in the battle between Godzilla and King Kong. But cinema owners, streaming services and film studios may just feel that it has turned out to be a draw.

Deliveroo flotation should teach Sunak to keep his opinions to himself

One week on from Deliveroo’s car-crash of a flotation, the picture is getting worse. The shares fell by 10% on Friday to 254.5p, taking the tumble from the 390p listing price to slightly more than a third.

A fall of that magnitude should dispel any thoughts that the flop can be explained solely as a protest by old-school City fund managers against the supercharged voting rights that Deliveroo founder Will Shu awarded himself.

The governance set-up is indeed hated in many quarters, but online retailer the Hut Group also has a founder’s controlling share and that IPO flew out of the traps last year. Deliveroo seems a straightforward case of overvaluation at launch. Goldman Sachs and JP Morgan Cazenove, the investment banks running the listing, got their numbers very wrong.

Deliveroo still got its £1bn of fresh capital and so has the chance to redeem itself. It has just annoyed the 70,000 of its customers who bought shares. But Rishi Sunak, the chancellor, who foolishly fuelled the Deliveroo hype in the hope of rebranding the London stock market as magnet for technology companies, badly needs to rethink his tactics.

The first lesson the chancellor should learn is to keep his name away from individual stocks. Tech investing is a high-risk game. There will be big winners and big losers and, since the chancellor has no special skill in telling one from the other, it is very unwise to endorse specific companies on day one. Success for tech push will be judged by the number of companies coming to market.

The second lesson is that the biotech sector, rather than the gig economy, is more likely to be fruitful territory. In the past fortnight, Oxford Nanopore has chosen to list in London, while Vaccitech opted for New York. Sunak would do better to spend his time trying to improve that conversion rate. And doing it quietly, behind the scenes.

Online fitness classes thrive even as gyms reopen

Pandemic-fueled online fitness classes have brought on a long-term change in the way — and the places — that people work out. (Dreamstime/TNS) © Provided by Boston Herald Pandemic-fueled online fitness classes have brought on a long-term change in the way — and the places — that people work out. (Dreamstime/TNS)

Last spring, when fitness clubs were ordered to close because of the pandemic, they started offering online classes as an option to their exercise-deprived clients. It was supposed to be a temporary fix, but it has become a long-term change in the way — and the places — that people work out.

Clubs are ramping up their online offerings to reach members who have realized that they like exercising at home.

“We took what we thought were lemons and made some pretty cool lemonade,” said Kyle Beste, vice president of fitness and nutrition for the Life Time fitness clubs. “What we thought was a stopgap solution has evolved into a new way of thinking about our business.”

By linking its clubs, Life Time is offering more than 600 livestreamed classes a week, with several hundred more available via on-demand recordings. As it ratchets up production, the company is eyeing as many as 1,000 livestreamed classes a week in everything from yoga to cycling, strength training to cardio workouts.

“If the members want to take a thousand classes a week, we’ll give them to them,” he said.

Life Time is far from the only club making this move. The YMCA360 program offers a wide range of online programs, from its Silver Sneakers classes for senior citizens to kids’ yoga. National fitness chains like LA Fitness and Orangetheory also have jumped into livestreaming.

Technological innovations — including Zoom, YouTube and FaceTime — have opened the online door to small, independent clubs, as well. There even are individual trainers who’ve gotten into the act, such as Minneapolis-based Kelsey Lindell, whose sessions are offered as part of the Shape Society Collective, a co-op fitness organization.

And it’s not just the clubs. The companies that make exercise equipment also offer streaming and on-demand classes. Peloton is perhaps the best known because of its advertising, but it has plenty of company, including Nordictrack and Bowflex.

Even fitness clothing companies have gotten into the market. Nike has launched its Training Club App. In addition to exercise classes, Reebok is offering wellness sessions. And the Mirror, recently purchased by Lululemon, offers real-time interactive training.

Of course, there also are the video offerings that were around before the pandemic but have stepped up production, including Crunch Fitness and Beach Body.

This is not strictly a U.S. phenomenon, either. A recent report by British-based AMA Research, which tracks trends in health care, said that interest in online fitness classes is growing worldwide and predicted that the gains will continue at least through 2025.

“Online fitness courses are rapidly gaining popularity due to the growing health awareness among the people, increased internet penetration and rise in smartphone users,” the report said. Everyone “from children to adults are taking huge interest in online fitness courses.”

One of the main motivators in Life Time’s surge in online classes was the realization that the landscape of the workaday world is changing.

Various economic analysts are predicting that even after the pandemic all-clear is sounded, many people will continue to work from home, at least part time. And that means that many people likely will continue to exercise from home.

“We want to meet people where they are,” Beste said.

“Most people are still working from home,” agreed Nastassia Smith, Life Time’s senior director of Group Fitness Operations. “It’s their new normal.”

Smith doesn’t expect the in-club classes to disappear; they’re still a major draw. But having the classes available online lets people choose which ones they want to attend in person and which are better squeezed into a busy schedule by connecting remotely.

They’ve also proved popular with the class leaders.

“The instructors can keep connected with the members of their classes,” Beste said. “They get a lot of energy from the classes.”

There was an adjustment period when the online classes first started, Smith admitted.

“People had to learn to engage virtually,” she said. “We were creating a whole new way of connecting.”

The goal is to make the person at home feel like they are part of the class. To that end, one of the spots in the class — person No. 7, if you’re into details — is replaced by a video camera.

“You’re just one of the people in the class, where 30 other people sweat with you,” Beste said.

There is also much more flexibility in finding a class that fits into a person’s schedule. All of the more than 150 Life Time clubs across the country are linked to the same web page, which means a member can tune into a class from the East Coast as early as 4:30 a.m. Twin Cities time or one from the West Coast as late as 8 p.m. The club from which each class originates and the name of the instructor also are listed.

“You can take a class from your favorite instructor or try something new,” Beste said. “You can shop locations. You can shop instructors. You can look for a time and format that works for you.”

— Tribune News Service

Global Britain must push for a lucrative trade deal with India

International relations is seldom simple, however, and Britain is likely to find building economic links carries tricky geopolitical challenges.

A report by the Chatham House think tank, released in January, named India among the early targets for Global Britain that “will be rivals or, at best, awkward counterparts on many of its global goals”.

There’s reason for hope, however. Firstly, Johnson is not his predecessors, and things have changed in the past two years. The PM, who visited India as Mayor of London in 2012 following a successful Olympics, has a clear personal brand advantage.

On top of that, the presence of two Indian-heritage politicians – Rishi Sunak as Chancellor, and unabated Modi aficionado Priti Patel as Home Secretary – in the Government’s top jobs shows the countries’ close ties.

Perhaps most importantly, the current Government has taken meaningful steps to roll back parts of May’s hostile environment. Students set to graduate from this summer can now remain in the UK for two years.

Momentum is building, and for the first time in years it looks like meaningful progress in relations could be possible. Global Britain may still be more of an idea than a reality, but India could be its crucial testing ground.