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Cautious optimism guiding UK residential market

KUALA LUMPUR: The residential market in the UK is making a steady upward climb in 4Q2009, building on the positive results from 3Q2009 as reported by Knight Frank in their Residential Development Land Index fourth quarter 2009 report for both urban and Greenfield (undeveloped) land.

Urban land values rose 2.1%, while Greenfield land rose 4% in the last quarter of 2009. The market revival is led by London and in popular areas such as Kensington, Chelsea and Westminster, part of the illustrious group of areas called “super-prime London”. The land values in these areas rose 7%.

Although the UK market’s strong performance bodes well for public sentiment, where UK house prices rose 6% across the year and sales volumes have picked up by 75% y-o-y in December 2009, the problem lies in the lack of supply.

“While the development sector has become more active, the supply of land in the market is still painfully thin,” Liam Bailey, Knight Frank’s head of residential research was quoted as saying. “We estimate that demand for land rose by 20% in 4Q compared to 3Q… At the same time, supply of land fell marginally by around 5% over the same period.”

The report shared that Ian Marris, Knight Frank’s head of London residential development, believes the mood of the market at the moment is one of cautious optimism. The positive reports of the past nine months in the mainstream market, he believed, will be over taken by the super prime market in 2010.

“Lack of supply remains an issue and it is the disequilibrium with demand which will push prices upward in 2010,” he said.

Knight Frank LLP is a leading independent global property consultancy and operates in 38 countries across six continents. Its work force of about 6,800 handles approximately US$700 billion (RM2.39 billion) worth of commercial, agricultural and residential real estate annually.

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