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LOFT on Location – London

Love it or hate it, the ‘Big Smoke’ has staying power. While the rest of the UK  struggles to stay afloat amidst economic woes and global uncertainty, London, in particular its prime property market, stands alone, boasting positive price growth and garnering frenzied attention from foreign investors. Newly home to The Shard, the tallest building in Western Europe, and with the Olympics fast approaching, there has never been a better time to focus on the UK capital.

Why buy now?

The Panel:

Neil Batty, Head of International Project Marketing, Knight Frank

Howard Elston, Associate Director at Aylesford International

Rosaline Lam, Director, International Properties, Colliers International

Simon Deen, Sales Negotiator, Aston Chase

NB (Neil Batty): Prime central London in particular continues to attract buyers because of its status as a safe haven for investors. It’s a politically stable environment offering the opportunity for capital growth in a tangible asset. The weaker pound and demand for international educational opportunities have also aided the market. We foresee that the first half of 2012 will be quiet; however with the London Olympics taking place in July and August, we’re expecting to see a burst to the economy with greater capital flows.

HE (Howard Elston): It’s always a good time to invest in Central London property as it has continued to outperform the stock markets and offers both good yields and excellent capital growth. The economic outlook for the country in 2012/2013 might be sluggish but London is a micro market and seen as a very good investment by overseas buyers.

RL (Rosaline Lam): The London market is closeted from the rest of the UK as it still remains one of the worlds powerhouses in the financial markets and it has increasing numbers of high net worth individuals from around the world coming to live in the capital creating {for an investor landlord} a pool of tenants that far outweighs the supply of quality properties.

The outlook?

SD (Simon Deen): That’s really a question for Mervyn King…although even he probably doesn’t know! The truth is that whilst the United Kingdom as a whole is suffering, along with most of Europe and the West, London remains in a ‘bubble’ for all of the reasons mentioned above.  For this reason we anticipate a continued and steady flow of foreign purchasers looking for both straightforward ‘rental investments’ or alternatively trophy homes for their own occupation.

Where to buy?

NB: Among the areas that have seen the fastest price growth are Westminster, Chelsea and South Bank. After an underperformance in 2010 and 2011, the City and Canary Wharf are expected to significantly outperform the UK and Greater London markets.

HE: The old cry is ‘always buy as close to Harrods as you can!’ This still applies. One tip for the future may be Battersea as the American Embassy moving there will undoubtedly push prices up. Also Westminster and Pimlico offer good value for money.

SD: Prime Central London, i.e. Knightsbridge, Belgravia, Kensington, Mayfair and Holland Park have always been the most popular areas in London for the global super rich.  However as these areas have become overheated by the feverous demand from a certain type of foreign buyer, the immediate surrounding areas have also seen an incremental rise in value. Therefore I would suggest areas such as Regents Park, St John’s Wood, Hampstead, Little Venice, Notting Hill and The Hyde Park Estate. They still provide excellent proximity to central London, but better value for money and potentially better rental returns.

How much should buyers be paying per square foot for a luxury 2-bed apartment?

NB: In excess of £1,000 per sq ft is likely to be the starting point depending on specification, facilities and location.

HE: Luxury two bed apartments are going for anything between £2,000 to £3,000per sq ft. In some cases more.

SD: That really depends what areas you are looking at, but as a benchmark I would say that anything between £1500 per square foot and £3000 per square foot.

Hidden Costs?

HE: The recent hike in Stamp Duty – now 7% for property over £2m and 15% on company purchases!


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