Over the past 12 months,the total volume of Asian investment in the central London housing market has totalled 761 million,says a recent report
During the peak period of the recent UK residential property boom,between 2005 to 2007,there was rapid growth in international investor demand for new-build residential property from Ireland,South Africa,Europe and Asia.At that time while demand was concentrated on London,there were also significant requirements for property in the larger UK cities - in Leeds,Manchester and Birmingham,in particular.While the market has returned to life,after its almost total closure in 2008,current demand is almost totally concentrated on London and,demand is primarily coming from Asia.
Asian investors comprised more than 49% of all investors,the dominant Asian nationalities being Chinese and Hong Kong (11% of the market),followed by Singaporeans (10%) and Malaysians (7%).Over the past 12 months,the total volume of Asian investment in the central London housing market has totalled 761 million.While the Asian investors' share of all newbuild sales is only 21% they have undoubtedly impacted on market performance and have helped developers to push prices higher since the beginning of 2010 - a welcome change following almost two years of flat or falling prices.
FUTURE PROSPECTS
Current sales evidence,in addition from feedback from Asia,is that demand for London property is still strong and this demand is likely to be maintained over the course of 2010 and into 2011.In forecasting future demand we need to be mindful of the conditions in the local housing markets and the wider economies in Asia.
China and India amongst other countries did not even experience a significant economic slowdown,let alone an actual recession,and wealth creation is continuing apace throughout the main Asian markets.As a result,significant new funds have been generated for future investment,with profits from local Asian property markets a key contributory factor towards this new wealth creation.
The rapid pace of price growth in home markets has caused problems for Asian investors.With prices pushed higher by 50% in the year to April 2010 in Hong Kong,for example,the impact on affordability and the ability to secure attractive income returns means investors have been pushed to look for international opportunities.
There are clear signs that price bubbles in many big Asian centres are beginning to deflate.The Chinese,Hong Kong and Singaporean governments amongst others have taken a much more activist stance in trying to manage this process.Their success or otherwise will have important repercussions for the central London market.
Initial feedback from our Asian teams suggests that there is a strong potential for the negative impact of lower housing wealth in Asia to be at least partially offset by a desire for investors to target safe haven locations such as London.The weaker pound has driven demand for prime London properties from an ever widening range of nationalities.Our own figures confirm that 49 nationalities bought across central London in the 12 months to May 2010.These buyers are driven by a range of drivers - from the need to secure primary residences,second homes or investment properties.
At the top of the market Russians have been joined by Indians,Middle Eastern buyers - who are back in force in 2010 - and European buyers.As the Euro crisis developed in April and May 2010 there was a noticeable growth in European buyers looking to place money outside the Eurozone.
Across central London there is considerable demand for residential property from a wide diversity of nationalities.However,when we look at the new-build market,and specifically the apartment market which suits the requirements of investors,it is Asian buyers who have been increasingly dominant.
Feedback on investor sentiment in the first five months of 2010 confirms this is a good time to move into the London market.Not only is there a belief that prices have further to rise,but that the city is in a strong position to benefit from the global economic recovery.
A significant driver for investment comes from educational requirements.Over the past decade,the number of Asian students studying at UK universities has risen by 175%.The strongest growth comes from Chinese,Indian and Pakistani nationals.In the case of China,the number choosing to study in the UK rose from 4,017 in 1998/99 to 47,035 in 2008/09.In many cases Asian investors look to buy to cover the period of their son or daughter's stay at university,the properties are then retained for investment.
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