International buyers to support prime London home prices

KUALA LUMPUR/LONDON (Jan 6): The residential property market in the Prime Central London (PCL) area will remain bullish in 2012, spurred by demand from foreign investors looking for a safe haven amidst uncertain global market conditions, said UK real estate agents and property consultants.

Almost every forecast is saying prices in PCL will go up in 2012, albeit at a slower pace than last year, said Camilla Dell, managing partner of Black Brick Property Solutions.

Compared with a 12% growth last year, PCL property price values are expected to rise between 3% and 5% in 2012 motivated by continued demand from foreign investors and buyers.

“Prices in the core prime areas of London such as Knightsbridge, Mayfair, Belgravia, Kensington and parts of Chelsea will be cushioned from any price falls and are likely to go up due to low supply and continued demand from overseas buyers and investors,” Dell said.

“Demand from international buyers should continue with force in 2012 as wealthy buyers continue to look for safe havens for their money. Demand will probably be highest from emerging market countries such as Asia, Africa, Russia and the Middle East. The Arab Spring and concerns in Russia about upcoming elections have all caused an increase in buyers from these countries,” she added.

Dell forecasts there will be an increase in Asian buyers for London property both for personal use and investment due to the recent tax increases in Singapore and restrictions on borrowing in Hong Kong.

Martin Bikhit, managing director of Kay & Co, also believes that the stamp duty increases in Singapore coupled with the sustained weakness of the pound is likely to result in continued demand for prime rental London properties. However, he warned investors to look at the quality and location of the product carefully before buying.

Overall, Bikhit expects to see a short-lived price fall in the UK this year but “PCL prices will continue to buck the trend and push ahead,” he said.

Vision Homes director Giles Underhill concurred, saying rising Asian wealth and the popularity of the UK as a safe haven for money from politically and economically troubled states in Europe and the Arab World will continue to push prices up. “London platinum postcodes will continue to soar as prime London property has effectively become a global community and its value has almost no connection to domestic affordability,” he said.

On the UK rental market, Bikhit expects more people having to rent and predicted rents to increase by some 3% to 4% this year. “In all probability, this trend will continue for the next four to five years, at around the same rate of growth each year. As a result we will see an increase in overseas buy-to-let investors,” he said.