Property in central London is in demand like never before from European and international buyers, and a flurry of new-build activity in the City is set to bring further investment into the capital’s prime market.
According to a study from Knight Frank, house prices in this area have increased by 53% since March 2009. International buyers are driving this price growth and over the last two years 51% of properties over £1 million have been from non-UK buyers with that figure rising to 60% for properties above £5 million.
In terms of where these international buyers are coming from, in 2012 Knight Frank reports that Europeans accounted for 13% of sales over £1 million; one in ten sales were to Asian buyers and nearly 6% were Russian investors.
“Although Europe has been – and still is – going through a financial crisis, the property market in London has benefited greatly,” said Tim Swannie, Director of Home Hunts. “Not only have Asian and Russian investors chosen London over other ‘safe haven’ markets, but we’ve seen an influx of Italian, French and Spanish investors. The weaker pound has made property investment even more appealing.”
There are many reasons why London is popular with Europeans and overseas buyers, and its diversity plays a major role. For example, London is often regarded as France’s sixth biggest city as over 300,000 French people live there. Education from French lycée schools in South Kensington and Clapham makes the investment prospect even more appealing. Other major draws are its political stability, lifestyle opportunities and superior higher education institutions.
Education is of major importance to prime market investors. According to Knight Frank, a third of investors buying off-plan do so because they intend for their children to live in the property while they complete their education at a London university.
Off-plan funding from Asian buyers has allowed developers to push forward with development schemes. Investment into central London’s new build market came to £2.2 billion in 2012 with Asian buyers accounting for 40% of these purchases. Many of these new units are appearing in the City, London’s financial district.
A presentation by property consultant CBRE recently revealed that new-build sales in and around London’s square mile have more than doubled over the last two years, with most activity happening in the fringes, such as Goodman’s Fields and The Heron.
CBRE estimates that there are currently 2,218 properties under construction in the City (and more in the surrounding areas of Docklands, the Southbank and the West End); a further 1,547 units have building permission and 1,336 have applications submitted.
“Traditionally you do not think of the City as a residential area,” says Jennet Siebrits, head of residential research at CBRE. “It always used to be a place where people worked, but now they want to live and socialise there too.”
While over 316,000 people work in the area, the residential side is still in development with 4.5 million square foot of development due to be completed by the end of 2014. Over the next five years the number of residents – currently at 7,000 – is expected to increase by a third.
For more information on prime property, including new-build investment opportunities in London, visit the Home Hunts website or contact the team directly on 020 8144 5501