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ON
friday
sept 27, 2013
By Rubini Kamalakaran
Contrary
to the rest of
UK, the London property
market has been benefiting
from the Global Financial
Crisis (GFC), especially in
recent years. The latest
report on the UK property
market shows a hike in
residential property prices,
to 9.7% in the last year. The
house prices which raced
passed their 2008 peaks, is
believed to be spurred by
high demand from foreign
investors for London
properties. A five year
forecast (2013 – 2017) onUK
property prices by estate
agents, Savills UK, shows
that London property prices
are generally expected to be
on the rise. Some of the
biggest players in London’s
propertymarket are the
Asians andMiddle Easterners.
Malaysia alone spent £1.4 billion
last year, snapping up City of
London offices. We’re the second
biggest foreign investor in London
commercial property after the US.
The biggest investment yet is the
£8 billion spent on the Battersea
Power Station, a re-development
project taken on by Sime Darby
Bhd, SP Setia Sdn Bhd and the
Employees Provident Fund under
the consortiumknown as
Battersea Power StationHolding
Co. In addition to those figures is
the growing number of Malaysians
snapping up London residences
annually.
Jazmine Goh, Director of Henry
Butcher Malaysia says from an
investment point, “London’s
appeal is allotted to it being a ‘very
safe and stable market’. Its
recovery since the global financial
crisis has been positive too.”
London versus UK
While the weak GBP is driving
major investment in London
property, the lure of the city never
ceases, in any economic weather.
This can’t be said for the rest of
UK. Goh confirms that “the rest
of UK behaves very different than
London.” Recent reports of the
widening divide of property
prices between London and the
rest of UK are telling. As one of
the greatest capitals in the world,
it’s a city steepedwith history,
firmly rooted in tradition, yet
modern. One can see reason as
Asians who share similar emphasis
on values and traditionwould be
inclined to London, judging from
many who are wiling to pay
premiumprices for one-bedroom
apartments in central London. The
bottom line for manyMalaysian
investors is that it makes sense to
invest in a London residence. In
many cases, they are parents with
children studying in London. Why
fork out rent everymonth when
one can invest money on an asset
that is almost guaranteed to yield
returns in the long run, questions
Henry Ng. He invested in a
three-bedroom apartment
just outside central
Londonwhere his two
daughters were studying.
Now that the youngest is
about to graduate, he’s
started looking into
renting. The latest report
on rental price in London
fromAugust 2012 to
August 2013 shows
growth between 2.7%
to 9.5%.
Pursuing Asian
Buyers
It’s no secret that foreign
buyers are sought after
by London property
developers. Weekend
London property
launches inmajor cities
in Asia like Hong Kong,
Singapore andMalaysia
has become a norm in the
recent years. Financial
Times quoted Tom
Rundall of Knight Frank
stating, “This whole
situation of selling
abroad has come about
because the banks
stopped lending andUK
buyers couldn’t get
mortgages, while Asian
propertymarkets were
still steaming ahead.”
The huge interest from
Asia has encouraged some
property developers in London to
consider Asian sensitivities
especially those of the Chinese,
like the number four for instance,
and the tendency to incorporate
feng shui aspects into their
property development blueprints.
Manhattan Loft Corporation CEO
Harry Handelsman admitted to
the Financial Times, of his
employing a feng shui master for
his developments. “I’mnot an
absolute believer in feng shui but if
millions of people believe in a
particular thing, then I don’t see
why we can’t try to accommodate
them,” he said. His new Stratford
development is designedwith
gaps in the walls to encourage the
flow of vital energy.
Though it seems like London
properties are in danger of being
majority-owned by foreigners, the
reality is 15% - 30%of a project is
allocated for local purchase per
UK government regulations.
Property developer Ballymore
recently revealed, at a media
briefing, of its latest project which
secured 60%of sales from local
buyers. Still, London property
launches in this region are not
looking to slowdown anytime
soon. Henry Butcher Malaysia
disclosed approximately eight
upcoming property launches in
the next three months.
The latest projects to have been
presented include The Tower at
Saffron Square by UK’s Berkeley
Groupwhich is a 414 unit
development consisting of one,
two, three-bedroom apartments
and penthouses located at
Croydon; TelfordHomes’
Horizons, a 25-storey luxury
development that includes 131
private apartments in the heart of
London’s financial district; and
City Island, a project by Ballymore
that offers a unique new riverside
mixed development that aspires to
be a mini-Manhattan.
* Look out for the follow up
feature to this article next week,
on Malaysian property developers
with projects in London.
>Malaysiamakeswaves as amajor
player in the Londonproperty
market
City Island, a 'mini--Manhattan' in London.
The Tower at Saffron Square.
London
calling
Boroughs Expected To See
Most Growth in next 5 years
1. Westminister
2. Kensington and Chelsea
3. Hammersmith and Fulham
4. Camden
5. Islington
6. Hackney
7. Wandsworth
8. Southwark
9. Lambeth
10. Richmond upon Thames
11. Haringey
12. Brent
13. Barnet
14. Merton
15. Harrow
16. Ealing
17. Lewisham
18. Kingston upon Thames
19. Greenwich
20. Hounslow
Source: The Telegraph (Based on estate
agents, Savills UK, five year forecast of
property prices in London)
prime markets
Five-year forecast values
Annual house price growth key:
Five year house price growth key:
Below 0%
4% to 10%
0% to 2%
10% to 15%
2% to 4%
15% to 20%
4% to 6%
20% to 25%
6% to 8% 8% and over
ACTUAL
FORECAST
2012
2013
2014
2015
2016
2017
5 years to end 2017
Central London
5.3% 0.0% 3.5%
8.0% 6.5%
5.5%
25.6%
Outer Prime London
5.0% 0.0% 3.5%
6.5%
5.5% 5.0%
22.1%
Prime Suburbs
0.4% 1.0% 3.5% 5.5% 5.0% 5.5%
22.2%
Inner Commute
-0.1% 1.0% 3.5% 5.0% 5.0% 5.0%
21.0%
Outer Commute
-1.6% 0.0% 3.0% 4.5% 4.5% 5.5%
19.2%
Central London
Prime Suburbs
Outer Commute
Inner Commute
Wider South
of England
House Price Predictions
Source:
Horizons located in the heart of
London's financial district.
INSIGHTS
CUT AND KEEP
