Reach for the stars – are penthouses worth their sky-high prices?

‘Penthouse’ is a word splashed around more liberally than a Formula 1 winner’s fizz. But it doesn’t always mean what you think. It may be one of several in a scheme. It may not even be on the top floor. One super-prime Central London scheme a few years ago boasted ground floor “penthouses” because of their palatial proportions.

So if it’s not simply the biggest and best property at the top of the tree, what determines how a penthouse is priced? And how does a buyer know if it’s really worth the vertigo-inducing price tag?

That’s precisely what UHNW buyers are asking, says Liam Bailey, global head of research at Knight Frank. “There is undoubtedly a premium for penthouses. They are generally in the best location, with the best views, best layouts, and unconstrained by the need to accommodate other flats on the same floors,” says Bailey. “But penthouse buyers are laser-focused on value. Is the premium being asked justified? In the small, ultra-prime, £25m+ market in London or New York, developers need to work harder to find the right buyer. But designed and delivered properly, then the buyers will come.”

Nick Candy’s 18,000 sq ft penthouse at One Hyde Park, priced at £175m, strays into what some property agents are calling the “giga-prime” market (that’s homes worth £100m+). And while billionaire buyers may closely watch every pound, a penthouse’s value is not all about price per square foot at this level, says buying agent Camilla Dell at Black Brick. It’s about rarity value, perceived prestige – and the Candy connection no doubt adds some noughts.

A world-famous architect or high-profile designer unquestionably inflates the asking price. Presented with an empty property, most buyers struggle to see its full potential.  Show them one that has been professionally dressed, and they can instantly see how it can work for them.

A finished, turnkey solution is also expected by many UHNW buyers, who lack the time to deal with the minutiae of interior design. If the property isn’t finished to perfection when they buy it, then they will bring in their own interior designer to make it so before they move in. In one five-star hotel-branded development in the Middle East, Rive Gauche London have interior designed every residence, including the three-storey penthouse.

In Monaco’s penthouse market, the bar has been set famously high by the five-storey residence at the top of the Tour Odeon. Its price has never officially been confirmed but reportedly costing €300m, it is the world’s most expensive apartment.

Perhaps even for Monaco’s biggest penthouse, the price has been set too high, as after several years, the property hasn’t sold. But other buyers looking at Monagasque penthouses now expect something of a similar calibre, and on a similarly elevated site in the principality, Rive Gauche London have designed a penthouse whose calm, relaxing interiors – which include Persian White Classico marble and fluted white plaster columns – compliment the deep blue of the sea in front. Touches of colour and contrast were added in brass detailing, sycamore veneers and a dining table topped with an exquisite lilac marble.  

This penthouse also provides another staple that wealthy buyers are prepared to pay a healthy premium for: panoramic views of water or greenery. Since the pandemic, UHNW buyers in London have been prizing green views (particularly over one of the Royal Parks) and outdoor space more than ever.

One of Rive Gauche London’s recent projects – a 4,200 sq ft penthouse overlooking Hyde Park – saw the design studio add another level to the terrace, creating a sumptuous inside/outside terrace with views across London. And developers Fenton Whelan recently launched the £60m penthouse at Park Modern in Bayswater, overlooking Hyde Park. The development is already breaking W2 prices, with sales achieving £5,000/psf.

Branding also plays a big role in penthouse pricing. A number has yet to be set for the huge penthouse at The OWO, the historic Old War Office in Whitehall that will, in late 2022, re-open as a Raffles hotel and Europe’s first Raffles-branded residences, but you can only imagine it will set its new records. 

“When UHNW buyers are looking for a home, brand trust, cachet and credibility are key,” comments James Price, Vice President, Residential at Four Seasons Hotels & Resorts, whose developments include the Four Seasons first standalone branded residences at Twenty Grosvenor Square. Besides trust in the brand, Price adds that the features that enhance a penthouse’s value are: location – which includes expansive outdoor space and incredible, panoramic views; architecture and design; incredible communal areas; and space and privacy.

For buyers designing – or customising – their own penthouse within a Four Seasons scheme, he suggests a focus on more space indoors and out, interiors by a leading design team and wellness facilities will “strengthen the long-term value of a penthouse”. The other must-haves, he says, are “private entrances, in-suite elevators and emotionally-intelligent technology”.

Each super-prime scheme nearing completion in central London right now has its jewel (or jewels) in the crown, so you would imagine a buyer of sufficient means is spoilt for choice over their perfect penthouse.

Not so, says Fred Scarlett, director at Clivedale London, whose Residences at Mandarin Oriental Mayfair scheme set new price records for Mayfair when the north and south penthouses sold for £25m (£8,000/psf) in 2018 and 2020. “There is virtually zero availability in the penthouse market, even for buyers with a metaphorical blank cheque,” says Scarlett, who found a solution for a buyer who wanted a penthouse at the prestigious Mayfair scheme when both had already sold; he joined together two apartments and created a new one. “Another best-in-class penthouse overlooking Hanover Square,” says Scarlett.

Scarcity, then, also plays a part in fuelling London’s penthouse premiums. Though the city may appear awash with penthouses at the top of new steel and glass towers from Nine Elms to Canary Wharf, when it comes to the genuine best in class examples, developers can pretty much name their price.