AS 2012 UNFOLD, exciting times are ahead for London, from playing host to the world’s greatest sporting event to celebrating a royal diamond jubilee. Add to that a vibrant art and architectural scene, world-class fine dining and a growing status as a leading fashion capital, and we have the most happening city for the year, according to international style magazine Wallpaper, which has selected London as 2012 City of the Year.
No doubt, these factors also contribute to the reason why despite — or perhaps because of — the threat of the eurozone crisis boiling over across the English Channel, London property continues to be popular with foreign investors. International buyers continue to hold up the prime London residential market, accounting for about 55% of prime central London sales in 2011 — 3% higher than in 2010 — figures from property consultants Savills show. Property agents believe the eurozone crisis has had a positive effect on house prices in London, which has seen an influx of super- rich buyers from stricken countries such as Italy, Spain and Greece.
INTERESTING TRENDS
And as investors — both foreign and local — increasingly see bricks and mortar as a safer alternative for their money in the long term, there are several interesting trends in London property this year for their consideration. Riverside living is a new property niche as the Thames River becomes a focal point for this year’s celebratory events. There will be new transport piers and public spaces such as a futuristic floating boardwalk along the Thames shoreline between Millennium Bridge and Tower Bridge to be built in time for the Olympics. All this has generated much interest in riverbank regeneration projects in the Royal Docks, Vauxhall/Nine Elms and South Bank areas. The latter two locations are in Knight Frank’s list of 12 central London hotspots with real price-growth potential over the next five years.
Another developing trend is the link between residential and retail property, as more Londoners are reportedly moving closer to their favourite shops. The Evening Standard says this is a growing trend in established London neighbourhoods such as Marylebone, Bloomsbury and Fitzrovia, where development projects incorporate designer homes alongside retail space.
This is in line with the strong link between luxury shops and luxury property, as seen in London’s most expensive SW7 postcode, which includes Knightsbridge and South Kensington. Here, high-end residential developments offer concierge services and the fine-dining facilities of neighbouring five-star hotels such as One Hyde Park and the Mandarin Oriental next door. And the upcoming Bulgari Hotel and Residences is believed to be the first new-build luxury hotel in London in more than 40 years when it opens this spring.
OUTLOOK FOR 2012
Property watchers believe that rental demand in Central London will continue to remain high in 2012, as tight housing supply, coupled with restrictive lending terms, deters many first-time buyers from getting onto the property band wagon. As at November 2011, the average rental rate in London was £1,033 ($2,035) a month, compared with £717 for England and Wales, figures from LSL Property Services show.
Property experts, however, caution investors not to expect a sharp increase in rental as in previous years — residential rental growth in Central London was about 16% per annum in the past two years. Knight Frank is expecting rental growth to shift to a more sustainable level of 4% to 5% for 2012, the lowest level of growth since late 2009.
The Central London lettings market, seen as a barometer for the City, has already felt the effect of the eurozone crisis. With fewer expats coming to work in the City because of the crisis, there has been a dip in enquiry levels in 4Q2011, reports Central London lettings specialist WA Ellis. Landlords, mindful of the uncertain economic climate and tightened household budgets, are also more flexible with rent negotiations, property consultant Cluttons notes in its latest report on the Central London residential market.
Another major factor to consider is the impact of falling earnings in the City, as further job and bonus cuts in London’s financial sector are predicted for 2012 with the continued financial gloom. The number of City jobs fell 8.5% last year and bonuses were reduced by 8%, the Centre for Economics and Business Research (CEBR) estimates. Residential areas, including Clapham, Richmond and Wimbledon, which are popular with bankers, saw lower levels of growth in 2H2011, Savills says.
Given this, CEBR is forecasting a 1.9% growth in London house prices this year, which is “almost stagnation” compared with previous years. Price growth in prime central London between March 2009 and September 2011 totalled 37%, the fastest rate of recovery seen in the market for 35 years, according to Knight Frank.
Notwithstanding all this, investors will continue to flock to the British capital in search of a safe, viable haven for their money, while London’s exciting new developments and growing stature as a global metropolis will ensure that this is indeed the city in which to live.
No comments:
Post a Comment