London on the rise: demand from foreign buyers spurs property market

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London property remains high on international investors’ agendas.  Strong global demand, particularly from Asia, underlines London’s status as a prime investment destination, and reinforces the inherently robust nature of London’s market. 

Aliwassa Pathnadabutr, Managing Director at CBRE Thailand, has identified the growing demand of Thais wanting to invest in London, and in response has launched an international property division that includes on its roster Virginia Ewart-James, who has been transferred from CBRE London as International Residential Investment Manager to offer a bespoke service catering to Thais wanting to make quality purchases in London.

An artist’s rendering shows Fitzroy Place near Tottenham Court Road.  The project received a positive response from Thai investors during a recent sales event in Bangkok.An artist’s rendering shows Fitzroy Place near Tottenham Court Road.  The project received a positive response from Thai investors during a recent sales event in Bangkok.

Demand

Demand consistently outstrips supply for London residential property, keeping it in the spotlight as a lucrative location to invest.  Apart from a minor blip in 2008/2009, prices have risen year on year across the London market.  In addition, demand is driven by its world class education; since 2007 there has been a 40% increase in international students, adding purchasers and tenants alike.  Over 1,600 Thais attended London universities in 2012/2013.

High-rise living

As the city’s population evolves, so does its skyline – high-rise living was considered to be a rare phenomenon in London in comparison to Hong Kong, New York and Bangkok, but that is changing.  The 87-storey Shard now towers over the 48-storey Pan Peninsular, the tallest residential tower in London when it was completed in 2008.

Virginia Ewart-James – CBRE Thailand.Virginia Ewart-James – CBRE Thailand.

Soon, the Shard will be joined by new London residential towers ranging from 50 to 75 storeys, which are currently either under construction or in the planning process.  However, with limited developable land and tight planning restrictions, the number of high-rise developments will still be limited.

The Tower on the South Bank is currently London’s tallest completed residential project and CBRE Thailand successfully introduced a number of Thai buyers to this Berkeley Group scheme situated on the River Thames.  This positive market response to The Tower has resulted in more high-rise residential schemes across the city.

The rise of the South Bank

The ‘golden prime postcodes’ of Knightsbridge, Mayfair, Kensington and Chelsea continue to attract investors, pushing prices into super prime – a minimum of THB 1.1 million per square metre – due to the distinct lack of developable land creating limited supply.  One property in Onslow Gardens in Chelsea, for example, has increased in value by 74% over a nine year period due to the huge demand from Europe, the Middle East and Asia which has pushed prices and created an overspill into surrounding areas.

One key area for growth is the South Bank which is seeing rapid residential development; the situation is comparable to Bangkok’s Chao Phraya River where redevelopment is fast occurring due to the greater availability of land.

Mark Collins, Chairman of Residential at CBRE UK, has said, “Given the quality of the schemes coming out of the ground, South Bank will soon be firmly established as a prime location.  High-rise towers, such as South Bank Tower and One Nine Elms, will change the South Bank’s landscape and pricing.”

The South Bank is attracting investors seeking new investment areas.  It stretches from Battersea Power Station in the west, which is opposite Chelsea, to Tower Bridge in the east, which is ideally located across from The City.  Two of London’s leading universities, King’s College and The London School of Economics and Political Science, are within walking distance of central South Bank, which is also a cultural hub for arts and entertainment.

Crossrail

Property values have increased in Bangkok with the arrival of new mass transit lines.  Crossrail is the first major mass transit underground network in London since 1979.  Operational in 2018, it is Europe’s biggest infrastructure project with 118km of railway lines to open up travel across London from east to west.  Reducing journey times by up to 25% and increasing capacity by 10%, it is a key factor in the London housing market.  Property along the route will not only boast accessibility to this improved transport, but will also benefit from capital growth.

London’s many parks, green areas and historical attractions make it one of the world’s most desirable cities to live. (Photo coutesy The Royal Parks/Press Association)London’s many parks, green areas and historical attractions make it one of the world’s most desirable cities to live. (Photo coutesy The Royal Parks/Press Association)

Two areas that will experience the greatest capital appreciation are Tottenham Court Road and Canary Wharf.  Tottenham Court Road in central London, at the eastern end of Oxford Street, boasts a prime location.  Fitzroy Place, a project which sold extremely well at CBRE’s recent sales event in Bangkok, is a luxurious residential development just 700 metres from Tottenham Court Road station that will immediately benefit from the improved infrastructure, reducing travel time to Heathrow airport to 28 minutes.  The last seven units are available from THB 92.75m.

Canary Wharf, home to Pan Peninsular and an important financial district, will also be enhanced by improved connections.  Canary Wharf to Bond Street will be a 13 minute journey.  Property prices are significantly lower than central London, and, with the availability of land, developers and investors alike are targeting this area.

Market outlook

2013 was a particularly strong year for the London property market with transaction volumes up 30% from 2012; a 9.5% increase in capital growth in prime London, and 10.6% in Greater London.

60% of units sold were under construction, an increase from 50% from the previous year – a trend which developers have identified, bringing release dates forward accordingly.  A good example is Battersea Power Station where all 800 units were sold in its first phase in Q1 2013.

CBRE also sold 1,800 new London units off plan in Asia; the UK’s Daily Telegraph reported that 41% of London property over THB 53 million per unit is purchased by foreigners.

London expert Ewart-James who has over nine years’ experience in the London market says, “London remains at the forefront for prime residential investment.  With strong employment opportunities, demand from professional tenants that maintains a healthy rental market, and one of the best rates of capital appreciation, it has become the leading destination for residential investment.  It is a safe spot to invest for a range of investors – those wanting to secure University accommodation for their children (now or in the future) or those looking for capital growth.”

(Source: CBRE Thailand Ltd)

London is a prime real estate investment destination for international buyers, with demand for high class residential units constantly outstripping supply.London is a prime real estate investment destination for international buyers, with demand for high class residential units constantly outstripping supply.

The 48-storey Pan Peninsular in Canary Wharf was the tallest residential tower in London when completed in 2008. (Photo/Wikipedia Commons)The 48-storey Pan Peninsular in Canary Wharf was the tallest residential tower in London when completed in 2008. (Photo/Wikipedia Commons)