By +Eric Jafari
Foreign investors are helping
to prop up London residential development according to research
from Jones Lang LaSalle. The broker revealed figures
suggesting that half of London's new-home buyers are international
investors tempted by the capital's reputation as a safe haven.
More than £3 billion was spent by overseas investors on new
houses in the city in 2012, an increase of 25 per cent on figures
"The London development market would be more challenging without
demand from international
investors," Adam Challis, head of residential research at Jones
Lang LaSalle, said.
"Since development funding from banks declined due to the market
downturn, international purchasers have provided a vital lifeline
to maintain supply."
The continued investment in the city from outside investors has
helped maintain its reputation as a safe haven. House purchases
from overseas investors has caused prices to rise in the city,
despite weakness in the housing market across the rest of the
House prices increased by 10.6 per cent in the year to March,
lead by a 38.7 per cent increase in the City of Westminster.
However, only about one in seven foreign buyers of London
properties actually live in the houses, the rest consider them as
investments and gain rental income from them.
"Without international investors, most residential developments
in London wouldn't happen and the housing crisis would be even
greater," Mr Challis said.
In addition, a decline of the pound has helped to attract more
investors due to favourable rates. Research from Knight Frank
revealed that the weak pound is enticing foreign buyers. It found
that prime London homes for US-dollar denominated buyers are
currently seven per cent below their 2008 peak.
US buyers could continue to see a significant discount on London
property in the next five years. In comparison, European investors
are facing rising London prices, with values rising by nine per
cent for euro-based investors.
Nevertheless, while the pound remains weak, demand is expected
to increase from overseas investors outside Europe.
13 May 2013
Eric Jafari,London residential development,international investors