Asian investors start to desert London property market due to strong pound
The status of Britain as a haven for foreign investors looking for decent returns in housing in the wake of the economic crisis may be coming to an end.
With its forest of cranes and mushrooming show apartments dangling plutocrat baubles from car lifts to Versace children’s play areas, Battersea remains outwardly the buzzing epicentre of the property boom that has turned London into Britain’s very own Monaco.
But if the rumblings from within a circle of brokers and investors involved in the redevelopment of the south London former power station and the surrounding Nine Elms area are anything to go by, the legions of foreign investors credited - and blamed in equal measure - for driving the capital’s decade-long luxury property boom may finally be getting cold feet.
Sime Darby, one of the major stakeholders in the redevelopment of the 42-acre Battersea site, acknowledged a “softening of interest” in buyers from Malaysia and elsewhere in southeast Asia who had previously been responsible for the spending splurge which saw the area dubbed “Singapore on Thames”. The Malaysia based company insisted that none of its existing sales agreements had been cancelled.
But with one estate agent recording a 10 per cent drop in the value of luxury homes in Battersea and its environs in the year to June, experts blamed the cooling of ardour for buying up London’s high-end penthouses on the strengthening of the pound in recent months and economic volatility in the home markets of investors.
Estate agent Knight Frank said purchases of prime London homes by Russians had fallen to 2.9 per cent of the total in the first six months of 2015, compared to 6.7 per cent in the previous period. Singapore-based buyers more than halved to 1.4 per cent and Chinese investors dropped to9.4 per cent from 10.9 per cent.
Sime Darby, which owns 40 per cent of the Battersea project, said in a statement: “We are witnessing softening of interest among buyers from Malaysia and southeast Asian regions, probably due to the prevailing volatile currencies and uncertainty in economic outlook. No exchanged contracts have been cancelled to date.”
With economists predicting a fall in the price of prime central London property of 10 to 15 per cent, some argue that a long-awaited dose of real estate reality is already beginning to hit the capital. Online estate agent eMoov said it had recorded a three per cent drop in demand for housing worth £2m or more in a single month in May. Demand has fallen since May in some 60 per cent of “prime” London boroughs, such as Westminster or Kensington and Chelsea.
Founder Russell Quirk said: “I don’t think that there are many who will shed a tear for the well-heeled, sharp suited Mayfair type property predators. They have long crawled along the golden streets of prime central London, yet it seems that the tide has turned.
“London has been a Monaco in the middle of Britain. But what comes up must come down and we are now starting to see a rebalancing with other parts of the country.”
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