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Investors who bought something at one of the countless London property launches held in Singapore over the past year might be interested to know they are partially responsible for the UK capital city’s “post-banking crisis property mini-boom”.
A combination of low interest rates, the weak pound and the opportunity to pick up prime London property at discounted prices has seen foreign demand leading the London property market. Nearly 30% of the 5,500 new flats and houses sold in London between January and September 2009 were purchased by overseas buyers, according to property research group MoliorLondon.
Residential prices in central London have risen 19% in the last 10 months, property agent Knight Frank’s latest Prime Central London Index shows, bringing prices to just 10% below the market peak in March 2008. According to Knight Frank head of residential research Liam Bailey, demand from Asian buyers has risen 120% from a year ago, with new-build properties along the River Thames and Canary Wharf attracting buyers from Hong Kong, Singapore, Malaysia and Thailand.
The biggest interest, however, is at the high end of the market; Bailey says non-UK buyers have made 45% of the property purchases worth at least £2 million in the past 12 months. Earlier this year, it was reported that Hong Kong property tycoon Joseph Lau had forked out £33 million for a six-storey mansion in Belgravia (whose residents include Roman Abramovich, Margaret Thatcher and Joan Collins), heralding the arrival of the Chinese super-rich to take the place of the Russian oligarchs and Middle Eastern oil billionaires in London’s luxury property market.
Aside from foreign interest, the recovery of the financial sector and the resultant return of the City bonus, and the shortage of homes available for sale have also been cited as the reasons behind the strengthening of the London property market, which saw a 10.2% increase in house prices in the year from January 2009 to January 2010. This is more than double the 5.2% registered for England and Wales as a whole in the same period, latest statistics from the Land Registry show.
According to the Land Registry’s January 2010 House Price Index report, January marked the fourth consecutive month of positive annual house-price changes in London, while the capital city’s house-price growth of 3.9% for the month was head and shoulders above the other regions in the UK. The average house price in London rose to £336,212 in January, giving homeowners a handsome profit of close to £13,000, the Evening Standard states.
Improving prices and strong demand have resulted in renewed interest from developers in London’s residential sector. According to Knight Frank’s Bailey, there was a 43% rise in construction starts in the exclusive borough of Kensington and Chelsea between July and December 2009, from 557 to 799 new homes. Commercial property developers such as British Land, Helical Bar and Heron International are also reportedly considering greater exposure in residential development in the capital.
In fact, Heron International’s The Heron, a 284-apartment tower in London’s Square Mile financial district, touted as the City of London’s first major residential development in more than 30 years, was launched on March 18. Sales at The Heron, where prices start above £400,000 for a 398 sq ft suite, had apparently already begun even before its launch.
Both The Heron and the nearby Bezier development, whose March 11 launch saw 100 units being offered at prices starting from £325,000 for a 324 sq ft studio, are expected to do well. There has been a dearth of residential property for those working in the City looking to live within close walking distance of the office, as City planners have in the past been unenthusiastic about residential projects for fear of affecting the area’s status as a top financial centre, the Evening Standard’s property writer David Spittles reports. According to Spittles, while some 350,000 people work in the Square Mile, only 8,000 live there.
These projects are also a strong vote of confidence for East London, whose property market is expected to pick up again as the London Overground’s East London Line extension opens this year, and the London 2012 Olympic Games approaches. Recently, the London Development Agency announced that it was looking for development partners on six sizeable sites in East London from the edge of the Olympic Park through the Royal Docks and into Rainham, Essex.
Not all projects in the area will necessarily be success stories, though. In the past few months, developer Galliard Homes has been taking up full-page ads in the London papers for “luxury stock liquidation” sales at several of its East London apartment projects. The latest is an “entire stock disposal” of its St Luke’s Square complex close to Canary Wharf and London City Airport, with two-bedroom apartments priced at £190,000, down from the original price of £290,000.
As with any property investment, potential buyers, particularly those from abroad, will do well to look beyond the upbeat statistics and persuasive sales pitches before signing on the dotted line. Extensive research on crucial factors like location and the developer’s reputation are necessary to avoid making a bad investment halfway across the world.
Lim Yin Foong was editor of Personal Money, a Malaysian personal finance magazine published by The Edge Communications, from 2001 to 2006. She is now based in the UK. This article first appeared in the March 22 issue of The Edge Singapore.
A combination of low interest rates, the weak pound and the opportunity to pick up prime London property at discounted prices has seen foreign demand leading the London property market. Nearly 30% of the 5,500 new flats and houses sold in London between January and September 2009 were purchased by overseas buyers, according to property research group MoliorLondon.
Residential prices in central London have risen 19% in the last 10 months, property agent Knight Frank’s latest Prime Central London Index shows, bringing prices to just 10% below the market peak in March 2008. According to Knight Frank head of residential research Liam Bailey, demand from Asian buyers has risen 120% from a year ago, with new-build properties along the River Thames and Canary Wharf attracting buyers from Hong Kong, Singapore, Malaysia and Thailand.
The biggest interest, however, is at the high end of the market; Bailey says non-UK buyers have made 45% of the property purchases worth at least £2 million in the past 12 months. Earlier this year, it was reported that Hong Kong property tycoon Joseph Lau had forked out £33 million for a six-storey mansion in Belgravia (whose residents include Roman Abramovich, Margaret Thatcher and Joan Collins), heralding the arrival of the Chinese super-rich to take the place of the Russian oligarchs and Middle Eastern oil billionaires in London’s luxury property market.
Aside from foreign interest, the recovery of the financial sector and the resultant return of the City bonus, and the shortage of homes available for sale have also been cited as the reasons behind the strengthening of the London property market, which saw a 10.2% increase in house prices in the year from January 2009 to January 2010. This is more than double the 5.2% registered for England and Wales as a whole in the same period, latest statistics from the Land Registry show.
According to the Land Registry’s January 2010 House Price Index report, January marked the fourth consecutive month of positive annual house-price changes in London, while the capital city’s house-price growth of 3.9% for the month was head and shoulders above the other regions in the UK. The average house price in London rose to £336,212 in January, giving homeowners a handsome profit of close to £13,000, the Evening Standard states.
Improving prices and strong demand have resulted in renewed interest from developers in London’s residential sector. According to Knight Frank’s Bailey, there was a 43% rise in construction starts in the exclusive borough of Kensington and Chelsea between July and December 2009, from 557 to 799 new homes. Commercial property developers such as British Land, Helical Bar and Heron International are also reportedly considering greater exposure in residential development in the capital.
In fact, Heron International’s The Heron, a 284-apartment tower in London’s Square Mile financial district, touted as the City of London’s first major residential development in more than 30 years, was launched on March 18. Sales at The Heron, where prices start above £400,000 for a 398 sq ft suite, had apparently already begun even before its launch.
Both The Heron and the nearby Bezier development, whose March 11 launch saw 100 units being offered at prices starting from £325,000 for a 324 sq ft studio, are expected to do well. There has been a dearth of residential property for those working in the City looking to live within close walking distance of the office, as City planners have in the past been unenthusiastic about residential projects for fear of affecting the area’s status as a top financial centre, the Evening Standard’s property writer David Spittles reports. According to Spittles, while some 350,000 people work in the Square Mile, only 8,000 live there.
These projects are also a strong vote of confidence for East London, whose property market is expected to pick up again as the London Overground’s East London Line extension opens this year, and the London 2012 Olympic Games approaches. Recently, the London Development Agency announced that it was looking for development partners on six sizeable sites in East London from the edge of the Olympic Park through the Royal Docks and into Rainham, Essex.
Not all projects in the area will necessarily be success stories, though. In the past few months, developer Galliard Homes has been taking up full-page ads in the London papers for “luxury stock liquidation” sales at several of its East London apartment projects. The latest is an “entire stock disposal” of its St Luke’s Square complex close to Canary Wharf and London City Airport, with two-bedroom apartments priced at £190,000, down from the original price of £290,000.
As with any property investment, potential buyers, particularly those from abroad, will do well to look beyond the upbeat statistics and persuasive sales pitches before signing on the dotted line. Extensive research on crucial factors like location and the developer’s reputation are necessary to avoid making a bad investment halfway across the world.
Lim Yin Foong was editor of Personal Money, a Malaysian personal finance magazine published by The Edge Communications, from 2001 to 2006. She is now based in the UK. This article first appeared in the March 22 issue of The Edge Singapore.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 799, Mar 29 – Apr 4, 2010
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