This article is taken from the August-September 2023 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.

Far from being playthings of the rich, what are often disapprovingly called trophy assets are an important part of a country’s investment attractiveness. Most countries have some and Britain has more than most. To have these shiny baubles for sale, attracting foreign money in serious measure, is a potent aspect of success. 

When the term is used one often thinks of real estate. London, as an international rather than English city, is effectively the only UK destination for foreign money seeking a home in such assets. We are comfortably ahead of the capitals and cultured centres of Europe. Delightful as Paris, Rome and Vienna are, they are not serious places for finance or growing businesses, merely Disneylands for adults. 

Everyone from the Vatican to oligarchs, with every type of Arab and Asian between, has been attracted by the stability, rule of law and optimal time zone, and bought assets in London. That has remained so despite the benefits being mitigated by relatively high taxation and transaction costs, indifferent weather and left wingers sniping about where they would prefer other peoples’ money is spent. There is some dirty money coming here to be washed and made respectable by London’s service providers, but closing those opportunities should not diminish the attractiveness of our trophy assets because the underpinning characteristics remain. 

Everyone thinks they know what prime property is and subsequently what is a trophy asset, but prime is the most desirable property by standards of accommodation, location, tenant quality and lease terms. Super-prime is the top 5 per cent of prime within a given area. Those are trophy assets. They are not bought for the income yields, which will be small, but as status markers and safe havens, with the prospect of value growth. 

It is possible, of course, to make wrong choices even if the sales agent is experienced

It is possible, of course, to make wrong choices even if the sales agent is experienced. Before London’s values exploded in the 1980s, other UK assets were in vogue. I know of one family that bought a great Highlands estate in the early 1990s for what was then a price record for the most expensive UK property. A fine baronial pile with tartan liveried staff, two moors, woods for pheasants, both banks of a river to fish and even a distillery, it was, I thought, the most magnificent home and expression of money I could imagine. 

The estate lost money most years and, after 25 years or so of exemplary stewardship and continual investment and improvement, the inheriting generation put it up for sale. After two years and the rejection of only a couple of offers, the family sold it for less than half what their father had bought it for. Even the cash received would have had its power diminished by inflation. It is now some sort of expensive timeshare. 

For the father it had fulfilled its purpose and bought him much satisfaction as a second home and sporting estate. What had gone wrong for the family was that the fashion had changed. The international very rich no longer covet vast windswept hillsides, summer midges, brumous winter light and the compensations of whisky beside a roaring fire. If they spend tens of millions and more on a holiday home, these days they prefer it to float.

Still, trophy assets are not always homes and offices, some enterprises have high status beyond money making abilities. Luxury hotels, football clubs and news groups come to mind. All are serious trades and yet are often coloured by profusions of higher purpose. 

The Barclays family had two of them but the Ritz has been sold and Lloyds Bank now controls the Daily Telegraph. The bank is eager to recoup debts owed elsewhere by the Barclays, rumoured to be as much as £1 billion. It may well be selling the newspaper and whilst in 2021 it made £33 million, turning over £245 million, the apparent price of £600 million is undoubtedly steep. 

Alas for the Barclays, they paid a whopping £665 million in 2004 but have made money some years. We will see what price is achieved and whether or not it is for pure cash or the assumption of some of the debt. In other words, will it be bought as a trophy or will commercial considerations be more to the fore?

I would list the Telegraph Media Group, at least in part, and send the prospectus to its readership subscriber base. Whilst life as a public company may not be very happy for Trinity Mirror (now called Reach), its readers are not likely to be part of our shareholding democracy and its newspaper readers have been declining. 

The yummy mummies and tweedy types who constitute the Telegraph’s 750,000 or so subscribers might well be tempted to house some of its shares in their ISAs. That would look like a win-win — a trophy asset for the many, where once it was just for the Barclay twins.