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Friday, December 2, 2011

Prime central London properties still in demand

KUALA LUMPUR: Global real estate service provider Savills said that despite a bleak economic outlook in Britain and burgeoning European woes, prime central London property will continue to be in demand and private rental expected to increase.

Barnes: ‘There are grounds for optimism because despite the bleak picture (for Britain’s economy), many people have been excluded from buying, so there is an increase for rental.

“There are grounds for optimism because despite the bleak picture (for Britain's economy), many people have been excluded from buying, so there is an increase for rental,” Savills director for research Yolande Barnes said.

Barnes said this at a talk on “Is London still a World Class City?” in Kuala Lumpur, her third stop in Asia after Hong Kong and Singapore.

She said that over a five-year period between now and 2016, rental growth was expected to be 20% compared with a five-year capital growth of about 6%.

Barnes' comments reflect a similar situation in major American cities. Bloomberg reported earlier this week that rentals are gaining ground in cities that have relatively robust job growth, such as Seattle, or pools of transient workers like in Washington, Los Angeles and Las Vegas as Americans are wary of buying a home or are unable to qualify for a mortgage.

Barnes said in the United Kingdom, lack of financing for both homebuyers and developers had affected the housing stock, the annual supply of which has over the past several years been about 25,000 units. In the 201011 period, the supply of housing stock has dropped.

“The lack of supply has put pressure on rentals so yields are expected to increase,” she said.

In the prime central London property market, the interest is mainly from foreigners, with top buyers from Russia and China.

“London is considered as a safe haven,” she said, adding that studies that compared London with other European cities showed international business people tended to prefer London.

Over a period of 18 months to June this year, overseas buyers spent 6bil in the residential market, the highest since 2007. Of this, a quarter went to newly built properties which were mainly purchased by buyers from the Asia-Pacific region.

By The Star

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