Forget ” Keeping up with the Jones’s ” – Penthouse owners know it’s really all about ” Looking down at the Jones’s “
New York. Home of the Penthouse? In a city where skyscrapers are common, the NYTimes.com recently published an article detailing the premiums people pay for Penthouse apartments. Prices in NYC rise 1-2% per floor, yet in London the first floor has often been the big money purchase. That links to the number of conversions, rather than purpose built buildings in London, where the first floor usually offers the grandest ceiling heights, picturesque aspects and more privacy than ground floor flats. Conversions don’t lend themselves to ‘penthouses’ too well. A penthouse is almost always associated to a purpose built block. The top floor of a converted house in London is often where the rooms are smallest, with lower ceilings or even sloping internal walls where the property is in the roof space.
Older purpose built blocks in London rarely incorporated Penthouses as we would think of them today. Indeed penthouses often popped up in 1980’s and 1990’s new builds and then became popular – offering a mix of good ceiling heights (at least the same as other flats in the building, if not higher), the best aspects and outdoor space. Terraces have become synonymous with penthouses as these flats costing as much as houses in the local area, command outdoor gardens of their own.
Blocks built before the 1990’s are now seeing penthouses added to their rooftops as building freeholders rush to get planning permission and install new floors, giving them a ‘windfall’ profit on their buildings. Some freeholders add a whole new floor to the building, others just a mansard roof, with new flats inside. Planning is often granted by local councils where the addition of an extra floor does not push the building roof line above the common building-height of the street and does not impinge on views or sunlight to neighbouring buildings.
Planning Permission Friendly
Councils surprisingly prefer this upwards development. Compared to basement flats an ‘upwards’ building extension is more intrusive, yet more often environment and neighbour friendly. Adding extra floors often involves modular units, which are built off site, brought in by truck, hoisted up to roof level then assembled. Most of these modular constructions are environment friendly. Moreover, basement conversions not only incur alot more energy and upheaval (moving all that soil), but neighbours have many more complaints due to concerns over party-walls, noise and disruption. Councils fear basement extensions add to flooding problems and may catalyse deterioration of neighbouring pavement and road surfaces. Even with a conventional brick and block penthouse extension, most of these concerns are avoided.
In London often only a sixth or seventh floor penthouse is needed to get above the ‘view-break.’ This is the brick-and-mortar horizon of neighbouring buildings. In New York, going above this line (i.e. gaining unobstructed views) commands a premium of 10-30%. In London it can be as much as 50% – especially in premium Central London areas such as Chelsea and Kensington, Mayfair or Knightsbridge. Buyers feel the premium is justified, not only because of the great views across to landmarks such as Westminster Abbey or St Paul’s Cathedral, yet also for the lesser noise and lack of intrusion from overlooking neighbours.
With the growing love of ‘lateral living’ enjoyed by Londoners and particularly European settlers in London, Penthouse demand is set to grow. Hence the advent of the ‘sub-Penthouse’ (on the floor below the real penthouse, also offering higher ceiling heights, terraces and premium fit-outs). As that demand does climb, the real premium will always remain in older buildings in well established areas like Chelsea, where conversions to modern spec penthouses come with the invaluable knowledge that no other buildings in the local area will be erected to a similar height.
Newer developments, often along the river, such as Neo Bankside or indeed the mega price penthouses that will be in the Shard will also command a hefty premium. Here it is the River Thames, creating a void of space, enhancing the penthouse views and the desire to view running water that provides the allure. The quality of penthouse view is surely a determining factor in pricing and a sliding scale goes from clear London Skyline views (+60% price premium) at the Prime end of the market, a full Park or River view being Premium end (+30% value), down to a view across to another building being the ‘Vanilla’ end of the market, with perhaps only a 10-20% premium.
Comparing the price of a penthouse to other apartments in the building can be frustratingly hard. For one, the floorplan of a Penthouse is often the largest in the building. Okay, you can take price per square foot, but how do you account for the premium that larger lateral flats in London often command? Next is outdoor space – very often the lions share of any outdoor space in a block of flats is given over to the penthouse. Usually there is no easy valuation on this square footage (plus it varies dependent on view and aspect – South being premium). Then there is the issue of volume. Penthouses of today often have the tallest ceiling heights. Valuation on a square foot basis is therefore futile. Ideally volume would be measured – but have you ever heard of pricing by the cubic foot?
Finally the fit-out of a Penthouse will almost always be superior to that of other flats in the building. This is both to distinguish the property in price terms and to set apart the buyer from the other owners. Older Penthouses will often have been renovated to a higher standard by more wealthy residents. Newer Penthouses will be filled with higher quality materials and toys. For many developers the old adage “The Profit is in the Penthouse” still rings true – especially in smaller developments. Bathroom fittings, kitchen units and appliances aswell as wood floor quality all steps up a notch to differentiate the penthouse. Air conditioning (or comfort cooling) is often added, underfloor heating is used where possible to remove radiators for clean lines. Large glass expanses are commonly used instead of large windows, sometimes replacing upto 3 walls in a room.
Luxury doesn’t stop with the fittings. Hardwood doors, silk carpets, upholstered walls (yes that’s right – fabric wallpaper!) are only the start for serious Penthouses. Separate His and Hers dressing rooms, boot rooms (large cloak rooms), bathrooms fitted with double showers and sun rooms (a room with 4 walls of glass in an elevated position) are very common. For added security and exclusivity, the best Penthouses offer: lifts that open directly into the apartment and underground secure parking with coded entry, proximity sensors for a James Bond like smart card you carry in your wallet, or the ultimate – number plate and face recognition.
Conclusion: The Only Way is Up
Penthouses have always defined luxury living and offered differentiation for the more wealthy buyer or renter. Today their image continues to grow and demand far outstrips supply. It really is that selfish mix of One Upmanship and looking down your nose at others, that appeals…