Render of birdseye view of a harbour from the top of a building
Luxurious estate home in the Italian countryside

Italy retains its place as one of the most desirable second home destinations in the world, says Andrew Hay. This property, Le Bandite is located in Umbria with easy access to Rome

Portrait of a man in a suit

Lord Andrew Hay

Lord Andrew Hay is Global Head of Residential at Knight Frank, the international real estate consultancy, and has built up property portfolios for some of the wealthiest people in the world. In a new regular column, he is handed a theoretical sum of money by LUX and asked how he would invest it. We kick off by handing Lord Hay £100m and requesting a global residential property investment portfolio

When LUX’s Editor-in-Chief generously offered me the opportunity to “invest” £100m into property, I was unsurprisingly delighted to accept. I have had free rein on where and what I buy, but have decided to invest with both my head and my heart. The reason being – I want to enjoy the properties I purchase but also have a clear focus on investment returns.

With this in mind, I have divided my allocation into equal thirds, between high-end luxury residential property, residential investments with a focus on capital growth and rental returns and investment into student property and senior living. The final 10% I would invest into an agricultural portfolio.

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I have to start in London. Often the best investment strategy involves an understanding of which markets are the least fashionable at the moment – and with Brexit and tax hikes London has been underperforming in recent years.

With few London neighbourhoods having a global brand as strong as Chelsea’s, I firmly believe that Chelsea is the perfect example of an area that has been underperforming and which is now ripe for reassessment.

Prices here have fallen 20% since late 2014, compared with a 12% fall across the wider prime London market. While new-build property in this category achieves a premium, established property trades at between £1,200 and £1,800 per sq ft. With many properties now edging below £1,000 per sq ft, Chelsea is back in the spotlight and cheaper than some less central and glamorous neighbourhoods.

Luxury interiors of a stately home

Interiors of a luxurious villa residence overlooking Lake Como

Yes, the area still lacks the connectivity of other prime neighbourhoods. However, with easy access to the river, unrivalled shopping on the King’s Road and Fulham Road and some of London’s best schools within walking distance – including the Lycée Charles de Gaulle and the London Oratory School – and the promise (or maybe hope) of a station on the future Crossrail 2 underground railway, Chelsea is set for rediscovery.

The next place I would invest is the other side of the world: New Zealand. New flights and rapidly increasing connectivity to Asia means the country is increasingly becoming a go-to destination. Auckland is the logical entry point and investment destination. One location in particular stands out to me – home to the 2021 America’s Cup, Wynyard Quarter is changing fast. Over the past decade, this waterfront precinct, once the heart of Auckland’s marine and petrochemical industries, has emerged as a major hub for national and international corporates, including Fonterra, Datacom, Microsoft and ASB Bank, as well as for the city’s innovation and co-working scenes.

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Staying in Australasia, I have to include Sydney in my portfolio – a market that has seen a huge growth in investment over the past two decades from around the world. The city may be remote, but education has been a driving force in attracting Chinese purchasers. The one location I would target is One Barangaroo – Crown’s new development. One Barangaroo is one of the most beautiful developments in the world currently being built and is achieving record prices on the shores of Sydney Harbour overlooking the bridge and the Opera House. It has brought a new global standard of facilities and services to the city.

Luxurious interiors of a penthouse apartment

New York design firm Meyer Davis have crafted designed the interior layouts of residences at One Bangaroo

Render of birdseye view of a harbour from the top of a building

View down to the harbour from One Barangaroo, the latest residential development in Sydney

In Europe, Italy retains its place as one of the most desirable second home destinations in the world. The new flat tax initiative however has cast the country in a new light as a potential permanent base for the world’s wealthy. Italy is certainly worth a closer look. Property prices in many Italian prime markets declined 40% in peak-to-trough terms following the financial crisis, interest rates remain at record lows and the country is better connected than ever before.

In the US, the West Coast is of especial interest to me, the combination of lifestyle and economic dynamism here is unparalleled anywhere else in the world. One area which appeals to me is Pasadena. Home to the Rose Bowl stadium, NASA’s Jet Propulsion Laboratory and the California Institute of Technology, Pasadena offers an attractive combination of relative value compared with neighbouring communities in Beverly Hills and West Hollywood, and the desirable lifestyle and privacy that residents of Los Angeles seek. The neighbourhood is easily accessible, with a light rail line that puts it within 15-20 minutes of Downtown Los Angeles.

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In terms of growth areas I would point to student accommodation and retirement. Student in particular is counter cyclical (i.e. typically more students in a recession). Participation in tertiary education globally is increasing – OECD predict 8 million internationally mobile students by 2025 (up from 5m today). Markets remain structurally undersupplied. In terms of where Sydney looks good it has a big student population and low pipeline due to shortage of development land. In terms of development, I like big European cities like Barcelona, Lisbon and Paris. European markets comprise with very little existing organised supply. Europe is new front for portfolio development, scale building and brand.

At the opposite end of the age scale is senior living where the market is undergoing rapid growth, underpinned by demographic shifts that are increasing demand for a wider array of specialist housing to suit the changing needs of older purchasers. London and the South East, Bristol and Edinburgh are key UK senior living markets. Globally, America, Canada and Australia are at the forefront of investment.

Finally I would invest in farmland. Choosing where to invest in agricultural land depends very much on your appetite for risk but the world faces both a water shortage and food shortage by 2040 and 2050 respectively and therefore, investors looking at long-term food security are well advised to invest in agricultural land. With the world’s fastest growing population, Africa offers some very exciting opportunities. Zambia, for example, provides a good balance of relative political stability and established infrastructure. The Asia-pacific region is seeing a huge growth in wealth and rain-fed farms on the east coast of Australia are well placed to take advantage of this market.

And, that’s my £100m invested.

Find out more:

Knight Frank’ Wealth Report directs ultra-high-net-worth individuals on where to invest in property and reflect $3 trillion of private client investment into real estate annually. The countries that have been most robust and performed best over the last decade have been those where there is a steady political and economic situation as well as transparent rule of law, high quality living and first class education. The above portfolio choice reflects this.

Reading time: 6 min
Vintage library scene with wooden bookshelves and a table and chair at the window

Logo reading Secret Diary of an Oxford UndergraduateIllustration of a woman wearing an elaborate eye mask

Oxford University is the world’s best, according to august publications like The Times. Oligarchs, CEOs, kings and presidents clamour alongside ordinary people to get their daughters and sons in; and for generation after generation of ambitious, intellectual kids, Oxford is among a handful of names that represent the ultimate in academic aspiration. But what’s it like to actually be there? Our anonymous diarist reveals all

November 2nd, 2018

Day 38 at Oxford. It’s 8am. Sunlight is pouring through my flimsy, green curtains, which may as well not be there at all for the light-blocking they achieve. In ten minutes my scout* will burst into my room, stomp across the carpet and empty my bins with all the subtlety of a rhinoceros, taking special care to slam my door on her way out. As I rub my eyes I think about what the day ahead has in store for me. Lecture at 9am, class at 2pm, tutorial at 4pm. And every hour in between? The library. With a yawn I roll out of bed and open the curtains. I can see the college library from here, and it can most certainly see me. I feel judged. (Note to self: go to library first thing tomorrow.)

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I begin to get dressed, now unbothered by the fact that everyone outside can see me in all my glory, my window conveniently overlooking the college chapel and quad; the Chaplain certainly gets an eyeful most mornings. I put the kettle on and prepare my ‘just add hot water’ porridge pot. Thirty-eight days, thirty-eight porridge pots. It is even more depressing than it sounds. In this moment I realise I no longer feel like a fresher at all. In fact it feels as though I’ve been here a lifetime. Yes, I feel like a proper Oxford student now. And this is in no small part due to my buying that bike I was talking about. It was the perfect solution to my near-existential crisis. Of course, I still feel just as out of my depth here as I did on my very first day, but I now pedal around the city, other students whizzing about me, aggressively ringing my little bell at all those spatially unaware pedestrians in the road – and I feel like I belong.

To be a true Oxford student, I have decided, one must have a bike. Perhaps more importantly, however, we have now been matriculated. That is, the freshers have been officially enrolled to the university and experienced the madness that is Matriculation Day, going through the rituals of signing the college register, attending the ceremony and partaking in the famous ‘matriculash’ celebrations thereafter. I think back fondly to Matriculation Day as I eat my porridge, which has now set like cement in the bowl. I have to admit I enjoyed the pomposity of it all, not least because we got to wear sub fusc** for the very first time. I spent a shamefully long time inspecting my new look in the mirror before we went to the ceremony: the academic gown, complete with elaborate shoulder streamers, looked like something from Harry Potter. The academic cap was another novelty, although these were made redundant from their head-covering capacities due to an old Oxfordian legend which dictates that it is bad luck to wear your cap before graduation (needless to say we found an astonishing number of alternative uses for it: drinks coaster, drinks container, frisbee, you name it). It was in this attractive academic get-up that we trotted down to the Sheldonian Theatre for the ceremony, tourists snapping photos and shoulder streamers flailing in the wind as we went. While some of us felt empowered by the costume, others felt like little more than misplaced penguins. And for A, that indefatigable workaholic I mentioned in my last entry, the sub fusc proved too much altogether: she tore her skirt while jumping for a group photograph and was sent running to the nearest H&M for a replacement with ten minutes to go. What a day that was.

My reverie is interrupted as someone opens my door and strolls languidly in. It’s not my scout, but a friend from the floor above. We’ll call her M. I met her at the offer holders’ Open Day in April and we hit it off immediately. Effortlessly edgy, make-up free and unnervingly intelligent, she is far too cool to be friends with me and I absolutely know it. I clung onto her like a limpet on our first day and we have been inseparable ever since. From essay crises to boy crises, all-nighters at the library to all-nighters at the club, we have packed years’ worth of friendship into no time at all. She doesn’t even knock on my door before she comes in anymore. (Note to self: lock door while changing.) It’s astounding how quickly relationships have developed since we’ve been here. I spend all hours of the day with people that I didn’t even know a month ago, and yet I now can’t fathom a life without them. What’s interesting is that I haven’t had to unmake a single friend that I made in Freshers’ Week: the people I spent those precious first days with are the same people that I spend all my time with now. Although, that isn’t to say I’ve got it completely right. I was that person who, attempting to establish themselves as the ‘fun’ and ‘outgoing’ one in the first week, invited everyone to their room each night for pre-drinks, my door left permanently unlocked so friends could come and go as they pleased. Big mistake. People now knock at all hours – yesterday I was dragged out of bed by a drunken rugby boy who felt compelled to have a deep and meaningful conversation at 3am – and it is exhausting. Oh, the price one pays for friendship.

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Standing in front of me now, M looks tired. With her laid-back nature comes a dangerous lack of academic productivity, that is, right up until the minute before the essay deadline. For someone who is notoriously uptight when it comes to work – I’m not proud to admit that my friends back home call me a ‘know it all’ – this is particularly stressful for me to see. Indeed M and I are total opposites. She works relatively little and achieves the highest results; I work all hours of the day and receive far less satisfying feedback. She invariably wears tracksuits and no makeup; I won’t leave my bedroom without making sure I am presentable for fear of running into someone on my way to the toilet. And at this very moment, as I fuss about tidying my bedroom, she’s lying on my rug lackadaisically, humming songs and watching videos on her phone without a care in the world.

The hot topic on everyone’s minds at the moment is houses. Students at my college live out during second year, and we’ve been told to start hunting for accommodation as soon as possible. We’re only in our fifth week of university, and yet we already need to decide who we’d like to live with. You can only imagine the politics. It feels like a huge leap of faith to be predicting who we’ll still be friends with in a years’ time – without really knowing whether we’ll all be friends next term. And there is, of course, the additional concern of trying to work out who you might have future romantic relations with: the second years have warned us against living with potential love interests because, after all, by this time next year they might be exes. In college, then, there is an atmosphere of trepidation. (Am I in the group? What if they don’t want to live with me? What if I don’t want to live with her?) Fortunately for me, there seems to be a group of us forming, slowly but steadily, and the house-hunting can get underway. But that’s not to say that we haven’t had to have a few awkward conversations. One boy, a PPE undergraduate, has proved frustratingly persistent in trying to wheedle himself into the group. We have nonetheless unanimously agreed that he cannot live with us on account of his questionable behaviour on nights out (he lacks an awareness of personal boundaries and the knowledge of how not to inadvertently harass girls).

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On the other end of the scale we have BFG, who I mentioned last time; he is in such high demand that hasn’t had to think twice about houses. Indeed, he has become something of a big name at Oxford. First division rugby player, writer and director of the college play, enthusiastic yoga-goer and probably the best-loved person in the entire university, BFG has friends everywhere – and he is completely oblivious to his fame. Since we study the same subject, he is a regular and welcome fixture in my life, and I’m not ashamed to admit that I’ve got my eye on him as my potential college husband. (Note to self: propose to BFG.) I wonder if I can persuade him to live with us?

M has just arisen from her horizontal state on my rug and is now dragging me by the arm out of my room. It looks like the time for daydreaming is over, not least because our lecture starts in ten minutes and we’re going to be late. I really must stop worrying about the politics houses and start worrying about that unwritten essay that’s due at 5pm tonight. Wish me luck.

* college cleaner
** official outfit for university ceremonies
Our diarist is an undergraduate at an Oxford college. Can you guess who she is? Read her Freshers diary entry here: The Secret Diary of an Oxford Undergraduate and check back in for the next instalment soon
Reading time: 8 min