Is investing in London’s prime properties really as safe as investing in gold?

For centuries many have put their trust in gold to always retain its value and protect them against inflation. The value of gold has increased by almost 100 times since the beginning of the last century. Today, an ounce of gold is still sufficient for a gentleman to be suited and booted nicely.

There are many similarities between gold and prime London properties. They are both tangible and unlike shares they do not lose their value because of incompetent managers. Unlike perishable commodities, property and gold last forever. They are both limited in supply and protect against inflation and economic uncertainty.

Throughout my 30-year career in the property industry, I have witnessed foreign investors’ absolute belief that investing in London’s prime residential properties is failsafe. It is this continued foreign interest that has helped to give London’s prime properties a status that in the eye of many is as good as gold.

Continuous strong demand from foreign buyers looking for a safe haven, coupled with a very limited supply of new properties due to strict planning regulations, has resulted in a phenomenal growth in the value of London’s prime residential properties. To illustrate, in 1981 I sold an apartment in Kensington next to the Albert Hall for £300,000 the equivalent of roughly 1500 ounces of gold. Today the same apartment is valued at £10m or approximately 9000 ounces of gold.

As the above illustration shows, over the past 30 years London’s prime properties have out performed gold many times over. Although gold and prime London properties have many attractions in common, property also fulfills a basic human need - it provides a roof over people’s heads. I therefore believe for long-term investors, prime London properties will not only prove as safe as gold, but that they will out perform gold once again in the next 30 years.

Mamad Kashani Akhavan
info@glfinance.co.uk

Has Mr Murdoch’s newspaper behaved any worse than other UK papers?

It is easy to criticize the alleged, deplorable actions of News of the World. However, it is important to remember that in the past, there have also been other newspapers that could be accused of inappropriate behaviour.

In order to win the circulation war, it is evident that staff at News of the World, were allowed to resort to any measures necessary to break new stories.

Similarly in 2009, to increase circulation, a quality newspaper editor – with his newspaper strapped for cash and fighting for survival – decided to take advantage of Dubai’s woes during the credit crunch. He sent his prize winning young journalist to Dubai to write a strong and shocking article. The eager journalist did not disappoint. He came back with an inaccurate, one-sided horror story portraying Dubai as a harsh and backward city.
However, once the newspaper was challenged by people including myself who know Dubai well, it could not produce any evidence to substantiate any of its comments. The journalist who published the article, has now admitted that he had invented witnesses for one of his other articles.

In response, I wrote an open letter dated 16 April 2009, titled THE DARK SIDE OF BRITISH JOURNALISM, where I stated that by allowing the publication of inaccurate articles, newspapers risked losing their credibility as well as the trust and confidence of their readers.

I believe it is rather insulting and bizarre, that the same newspaper which sacrificed truth and integrity to sell more papers, is now one of the biggest critics of the News of the World’s actions. The pot is now calling the kettle black.

Mamad Kashani-Akhavan
info@glfinance.co.uk

Should the UK government have frozen properties owned by Libyans in London?

Before I start I would like to introduce myself to those of you who do not know me. I Mohammad (Mamad) Kashani-Akhavan have been working as an International Property Investment Consultant based in London for the past twenty nine years. I shall limit my response to the above question to my own area of expertise: international investors and their continued interest in the London property market.

There are many reasons that make investing in the London property market attractive to foreign investors. One of the most important reasons is the fact that the UK has an established legal system for safeguarding foreign ownership, which gives foreign investors the security and confidence they need to invest.

London property has proved a powerful tool in attracting foreign investment that has benefited the UK economy. It is therefore extremely worrying to realise that the UK government - for political reasons - has frozen Libyan owned properties in London without a valid legal reason.

The fact is that in the UK properties can only be purchased legally and in compliance with all the UK laws and regulations. It therefore does not follow that the UK government should be allowed to prevent any foreign investor from selling assets which they have already purchased by following all the UK laws and regulations. Surely the only authority in the UK that should have the power to freeze properties in the UK should be the Court and not the UK government?

In my opinion, the UK government should not have undermined the confidence of foreign investors in the protection of the British legal system for foreign ownership. It seems to me, that the UK government is lecturing other countries about the importance of the Rule of Law and yet conveniently, it has completely forgotten that we are all innocent - including unpopular foreign rulers - until proven guilty. I believe that the freezing of Libyan owned properties in London has seriously damaged the UK’s reputation as a safe haven in the eyes of many international investors.

Mamad Kashani Akhavan
info@glfinance.co.uk

Should the government allow banks to continue making bad decisions?

I write further to the article published in Property Week criticising Ardeshir Naghshineh – Chairman of Targetfollow – for being too proud. I find it bizarre for anyone to criticise a brilliant property man for being too proud. Surely being proud, hardworking and motivated are the qualities that should be admired and not criticised.

I believe the criticism should be directed at the faceless bank officials who made yet another bad decision by putting part of Mr. Naghshineh’s property empire into administration. On the one hand, these bank officials lend irresponsibly and excessively when property prices are rising, only to become irrationally fearful and start unnecessarily repossessing properties when they think the property market is no longer rising.

It has been proven time and time again that allowing competent property entrepreneurs the time and support they need to sell their assets themselves, is a far better and less costly process than appointing receivers with no knowledge of the properties they are selling. Unfortunately, banks are unduly influenced by short term market conditions, they become impatient and unreasonable at the time when they are most needed.

It is undeniable that most of the decision makers in the banks have no practical experience in the property industry and base their decisions solely on the strength of the paperwork put in front of them. In my open letter to Mr. Brown (then Prime Minister) published in the Times on 11-03-09, I argued that a fundamental change in the way which banks lend to the property industry was imperative as no amount of paperwork could possibly replace the expertise and experience required in deciding who to lend to, and understanding the viability of the property they are lending for.

I now believe that there is also an urgent need for change in the way banks place property companies into administration. In my opinion, it is important for the Government to set up a committee consisting of members with expertise and property experience to independently examine the bank’s decisions before they are allowed to place large property companies into administration.

Mamad Kashani-Akhavan
info@glfinance.co.uk

Is this a good time to invest in the London property market?

Dear All,

During the past few weeks I have been asked by many of you whether this is a good time to invest in the London residential property market. However, before I begin I would like to introduce myself to those of you who do not know me. I, Mohammad (Mamad) Kashani-Akhavan, have been working as an International Property Consultant based in London for the past twenty nine years.

Throughout my career I have witnessed a phenomenal growth in the value of London’s prime residential properties. This has in large, been due to strict and inflexible planning regulations creating a very limited supply of new properties coupled with a continued strong demand from foreign buyers looking for a safe haven to invest. To illustrate this point, I sold a house in 1984 for £1 million. This house – located in Knightsbridge – is now valued at £23 million. During the same time period, the value of the FTSE 100 has only increased 5 times.

In my open letter published in the Financial Times on 29th January 2009, I stated that foreign investors’ demand for prime properties in London is for many reasons. To name a few, the UK is politically stable and thus a good fairground for investment. It also has an established legal system safeguarding foreign ownership which gives foreign investors the security they need to invest.

However, is there a time when the prime London property market with all its attractions, will fail to attract an ever increasing number of foreign buyers to continue fuelling the engine of its price growth? It is important to remember that buyers are finding it increasingly difficult to find properties that represent sensible value anymore. As an example, it is difficult to justify an asking price of £11 million for a four bedroom apartment in a new development along Bayswater Road, a second-rank neighbourhood in Central London.

Given the fact that London property prices have now become too high compared to most other major cities in the world, I believe that a cooling off period in property demand from foreign buyers is likely. This could lead to a long period of stagnation. My advice to investors therefore is simple: whilst I believe it’s always a good time for long term investors to purchase property in London, it is now more important than ever, that they should wait for the right opportunity and only invest where the price of the property is sensible. Investors should not buy properties that do not represent good value with the sole hope of making money in what they believe will be a never ending rising market.

Wishing you all every success.

Mamad Kashani-Akhavan
info@glfinance.co.uk

Is the UK Government making its people prejudiced?

Dear Mr Cameron,

I have watched and read with interest your comments on restricting the number of immigrants into the UK. As a business man – having worked successfully as an international property consultant based in London for the last 29 years – I support most of your business related policies. I further believe that you have the necessary qualities to become an excellent Prime Minister.

However, I strongly disagree with your assumption that it is possible to control the number of immigrants coming into the UK. It would be extremely difficult to stop determined economic migrants – searching for a better life in the UK – from finding clever ways to enter and remain in the UK. More importantly, I believe the main concern of voters is not the number of immigrants but the unfair system that allows many immigrants who have not paid any taxes in this country to take advantage of social housing, free schools and a free health service. Voters would in fact probably welcome any number of immigrants wishing to reside in the UK as long as they bring in either capital or the required skills and hard work necessary to help the UK economy grow.

In my opinion, if you wish to receive the required votes to become the next Prime Minister, you must start listening to what the voters really want from a strong Conservative leader on important issues such as immigration. It would be fair to say that unless a case requires genuine humane consideration, immigrants should not be entitled to any benefits. To quote the words of a taxi driver I once met: “We like foreigners living in our country, what we hate is our government allowing immigrants so many freebies at our expense. Our government is making us prejudiced.”

Regards,

Mohammad (Mamad) Kashani-Akhavan
info@glfinance.co.uk

Should British Airways shareholders challenge their managers decisions?

Dear All,

I believe that the one thing the Credit Crunch should have taught us by now is that we should all go to any length to put our point of view forward, especially where a subject as important as the survival of an important British Institution such as British Airways is concerned. In the past our silence and in particular the silence of Shareholders and Board members, has allowed the Senior Managers of important institutions such as the Royal Bank of Scotland to continue making irrational and bad decisions. In my open letter to BA Shareholders in the Times on 24.03.2010, I stated that as a frequent premium passenger, I strongly felt the only important remaining advantage in flying with British Airways was the quality and experience of its cabin crew. Having put my opinion as a passenger forward, I would now like to consider the situation from a business perspective. One does not have to be a financial genius to figure out that British Airways’ only chance of long term profitability and survival is by continued improvement in the service that it currently offers to its premium class passengers. It is these business passengers who are generating a significant proportion of BA’s profit and they expect an excellent service in return for their continued loyalty in flying with BA. Coming from a family of entrepreneurs having employed thousands of people and with my own successful career in the property industry spanning over 28 years, I completely understand the necessity in certain circumstances of reducing expenditure religiously to remain competitive. However, it is of utmost importance to act intelligently when implementing a reduction in expenditure. Costs should be cut only in areas where the decrease in expenditure does not result in a reduced and inferior service to high paying customers. In the case of British Airways, customer satisfaction is directly linked to the experience passengers have when flying with BA. Their experience with a professional and experienced cabin crew who are the face of BA and the one asset it has left to offer which distinguishes it from many other airlines, should not be sacrificed for a relatively insignificant cost saving. I received a huge response to my open letter in the Times on 24.03.2010. These included responses from BA Shareholders expressing their anger and disappointment with the inflexible and arrogant manner in which BA’s Managers have been dealing with their cabin crew. It is undeniable the BA’s Senior Managers have made many serious mistakes such as price fixing, bad planning for the opening of Terminal 5 and now their unfair and commercially unjustifiable treatment of their loyal cabin crew. I believe BA’s Shareholders should hold its Senior Managers accountable for their actions before it’s too late. It has bee proven time and again, that Senior Managers often happily retire with big bonuses whilst the Shareholders, other employees and general public are left to suffer the consequences and losses resulting from their bad decisions. Let us hope this does not happen with BA.

Kind regards,

Mamad Kashani-Akhavan
info@glfinance.co.uk