Builders and contractors attracted by international interest in London property market
House builders and contractors who are traditionally focussed on the UK residential market have switched their focus towards London in order to take advantage of the international interest in the city’s property market.
A new report from consultants Colliers International shows that the central London residential market remains resilient. House prices in London have increased to pre financial crisis levels and there has also been rapid growth in rental values across the capital.
Rents in London regularly exceed £1,000 plus per week in central prime areas of the city and since 2000 property values in London, in particular in the prime sector, have consistently outperformed the FTSE 100 over the long term, the report says.
‘Foreign buyers, institutional investors, commercial property companies, developers and private buyers are all seeking to cash in on the high level of demand in the market. London has a stable and liquid housing market, making it especially attractive to foreign buyers who are caught up in sovereign debt issues and concerned with wealth preservation,’ the report explains.
London’s super prime residential market is particularly attractive to many high net worth individuals, none more so than the iconic One Hyde Park. The high specification apartments have attracted more discerning buyers from the Middle East, Russia and Asia and the sales figures continue to break records.
Anecdotally, the Greeks, Russians and Chinese seem to be the most active in the London prime residential market, finding a safe haven in the UK to invest their money. According to a recent report by Hawker Beechcraft Corporation, more than half of London’s most expensive residential property sales last year went to overseas buyers.
The Chinese government crackdown on real estate lending and tighter ownership restrictions in China is putting pressure on the country’s real estate market, which is beginning to slow. As a result, property prices have dropped by 30% in various areas of China.
The safety of investment and assets has become a top priority for wealthy individuals and is driving them to diversify their portfolios by acquiring international assets in capital cities across the world. Developments located in both Canary Wharf and the City are hot spots for Chinese buyers, as well as high end luxury properties in the West End, says the report.
House builders and contractors are also increasingly attracted to the buoyant London residential market. Some have even changed course to focus on the more profitable London market. In addition to the London focused developers, such as Barratt and Berkeley Group, house builders and contractors, who have traditionally focused on areas of the UK outside of the South East, are now pursuing a London development plan such as Taylor Wimpey, Redrow, Crest, Galliard and Ardmore.
Taylor Wimpey and Redrow have now focused their attention on London, with both developers acquiring further sites in the capital in 2011. Last year, Crest Nicholson began a £100 million residential development drive in London targeting mid range sites and developing 50 to 150 units at a time.
Contractor Ardmore, already involved in luxury hotel work, is now involved with high end luxury residential developments in the capital.
‘London’s stable and liquid housing market makes it especially attractive to foreign buyers. Without the Asian market in particular, the London market would not look so appealing to those developers and contractors who traditionally have not been active in the market,’ the report concludes.