By +Eric Jafari
Asian and Middle Eastern
investors are increasingly opting for new build property in
London, according to new research from Cluttons.
With demand for rented accommodation increasing in the city,
this perhaps comes as little surprise. Private tenancies have
increased by 80 per cent in the capital over the last decade and
the buy-to-let market will certainly pay dividends for savvy
However, it isn't just Asian and Middle Eastern buyers that can
exploit opportunities in London. There is considerable potential
for high returns across the city, particularly with the weak value
of the pound making many currency exchange rates favourable. New
build rental accommodation can also demand a high premium due to
location and quality. Properties are efficient, have lower
management costs and can be tailored to individual markets. This
makes properties attractive to professionals that are willing to
pay much higher rents.
Bill Siegle, senior partner at Cluttons, commented: "Given that
the average price of apartments in prime Central London has
breached the £1 million mark for the first time, it is ever more
important to cater to the growing pool of renters, for whom
homeownership in London continues to seem increasingly unlikely,
with our forecasts suggesting a 25 per cent surge in capital values
over the next five years."
He added that outside of the prime
core, higher returns are available and gross yields "are more
favourable" in these areas. Consequently, buyers are exploring
locations considered to be more secondary. Improved transport links
and better value for money are making these areas more viable.
With international residential buyers now capable of
capitalising on currency linked savings of approximately 15 per
cent for Euro buyers, rising to 33.5 per cent for the Singaporean
dollar, London is becoming a magnet for investors. In the Middle
East, sterling has also lost its value against the UAE dirham and
at the end of Q1 the currency had an exchange discount of 18.5 per
cent relative to the market peak. Cluttons isn't confident sterling
will strengthen in the near-term either, meaning the capital will
continue to be a hot spot for foreign investors.
Nevertheless, the housing shortage in the city means this could
become a problem for British-based investors, unable to raise
similar capital to their overseas counterparts. Snapping up
new-build affordable housing for rental could also reduce the
amount of stock available to residential buyers, which will
heighten the housing crisis in London.
04 June 2013
Prime London Property,London Residential Property Construction,London Property Demand