London for newcomers

London is the financial hub of Europe and one of the largest global financial centers. Thus, it should come as no surprise that the London property market took a nasty fall following the biggest crisis since the 1929 crash. In the third quarter of 2008, real estate property deals in downtown London fell to around 20% of the volume registered in the third quarter of 2007, according to commercial real estate brokers and consultants Cushman & Wakefield. But things have started to improve in 2009, with Cushman & Wakefield posting volume growth of 29% in the third quarter of 2009 versus the disastrous year of 2008 in the main London business regions: the City, the West End and the Docklands. Foreign clients are driving most of this recovery, notes Cushman& Wakefield. So, what can a hypothetical Brazilian company planning to set up a subsidiary or an office in a city used to large deals and very high prices (even on the heels of a massive crisis) expect? Renting commercial property in London has never been easy. One of the best pieces of advice is to seek out a professional opinion from a lawyer, bank or broker before signing the lease agreement. Real estate brokers are a necessary agent and an insurance blanket against any underhand dealing. It is advisable to deal with a broker experienced in real estate property and with a track record of success. The lease period is agreed upon between the lessee and the lessor, but it’s important to be realistic and not agree to a longer stay than you can afford. The leases (rent contracts) are very expensive, and cancelling them is a major headache. In the UK, leases are documents with legal value. If their rules and clauses are not fully met, the lessee or company will probably be sued and have to pay astronomical fines. The difference vis-à-vis commercial practices in Brazil is significant. In London, you don’t need a guarantor. The importance of the lease contract is such that the role of a guarantor is rendered useless. Anyone can rent a commercial property, provided they sign a contract and agree to the possibility of being sued in the event of default. One of the most interesting alternatives to leasing commercial offices is to rent a virtual space. Companies that work in this market offer, 1-4 times a month, offices usually located at prestigious addresses, with technological facilities for client meetings. Thus, a newcomer to the market can avoid committing to a lease, save on personnel admittance costs and, at the same time, have an address and a well-equipped office for meetings or presentations, as well as a receptionist. These temporary use agreements cost upwards of 60 pounds per week. For small- and mid-sized companies, they are a otentially good alternative to the high rental price of rooms or offices.
A large-size company needs to have its own office with employees fluent in both English and Portuguese. If the lease contract is the adequate option, the company must consider not just the weekly or monthly lease cost, but other types of fixed expenses, such as service and condo fees. For example, a 110m2 office in Holborn (close to the City) costs approximately £1,500 (R$4,800) per month plus, on average, £12,800 per year in rates and services, totaling over R$42,000 per year. More expensive districts, such as Mayfair and the Marble Arch region (where Petrobras’ representative office is located) can cost up to twice as much.
The tip for any company, small or large, is the same: do your homework and study every last detail before shaking the broker’s hand and signing the lease contract. For a Brazilian company looking to set up shop in England, one of the safest and most accredited sources of information is the Brazilian Chamber of Commerce, in Mayfair, next to the Brazilian Embassy. There, Brazilian businessmen can obtain a whole host of information: from renting a room for their business to the type of advertising that best represents their product or service. With well-established and close relationships between the two countries, the Brits are welcoming Brazilian businessmen with open arms. Here, as in other places, Brazil is fashionable.