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Saturday, July 11, 2009

Making British property attractive

There is something about London which tugs at the heart’s strings. The place evokes a sense of nostalgia, especially among those who studied and lived there. Australian cities do not have the same effect, says a property consultant and valuer from Henry Butcher.

The company has, of late, exhibited four projects in Malaysia since the last quarter of 2008 after the devaluation of the British pound. There are expected to be more such weekend property exhibitions in Kuala Lumpur, Singapore and Hong Kong in the second half of this year.

Grouped together as the Far East, British developers have been marketing their projects sometimes 10% to 20% off their published British prices.

Says an agent: “Unlike Malaysia, where prices are fixed, it is possible to bring the price down a little or to ask for better terms. Two years ago, there was no room for negotiation. It’s different today.”

He managed to get a two-year rental yield of 6% for a buyer, and an 18-month rental yield for another at the same rate. A furniture package was also thrown in, complete with cutlery, tables and chairs, when these were not included in the selling price.

“If the owner were to provide this for the tenant, it can add up to quite a bit. So there is room for negotiation,” he says.

Despite London being one of the most expensive cities, Malaysians have shown keen interest, but they are price sensitive, preferring those in the £200,000 price range. In ringgit, that’s about RM1.2mil already. (An average cost of a house in mainstream market in Britain and Wales is £160,000. London prices is not representative of those in overall mainstream British market.)

Henry Butcher brought in several projects of late ranging from £120,000 to £925,000 for one to three bedroom units from zone 1, which is prime central London, to zone 5. The most popular was CityWalk, with a SE23, London address close to Forest Hill Station and about 10 minutes to London Bridge. The one-bedroom unit (of about 480 sq ft) begins from £169,950 and the two-bedroom (700 sq ft) units £250,000. This project was sold out when in Singapore, Kuala Lumpur and Hong Kong.

Some buyers have so much confidence in the London property market that they bought without checking out the place. Others prefer to fly over to check out the place.

Two agents from different consultancies say they will not bring in the top end housing in the prime Central London in Chelsea, Knightsbridge or Hyde Park which may go into several million pounds.

“Not that Malaysians could not afford it, but they will not go into this segment,” he says.

If what he says is true, Rahim & Co will have a challenge on their hands. Managing director Robert Ang says it has put together a deal between a Malaysian developer and a British company to enter into a £6mil land deal several weeks ago.

The 50:50 joint venture is expected to develop a five-storey office and residential building located in the heart of Chelsea, one of most affluent prime residential areas in Central London. It is within walking distance of both Kings Road and Chelsea Embankment and the Thames. They are seeking planning permission for 10 units priced between £1,200 and £1,300 per sq ft. How much the unit will sell for is not known yet.

“This will be a quality development,” says Ang. For some buyers, location is paramount. A source related the story of a Malaysian who bought a £600,000 property in the early weeks of the crisis and today is looking for another in prime central London.

During a recent outing to Kuala Lumpur, Battersea Reach in the township Battersea and Aquarius House, on St George Wharf in Vauxhall SW8, had few takers. Singaporeans showed more interest. St George, the developer for both, is a subsidiary of Berkeley Homes group, one of Britain’s largest developers.

Both are riverside projects in the south but in terms of connectivity, Aquarius in Vauxhall SW8 offers more transport options than Battersea. The price for Battersea begins from £830,000 and goes up to £2mil (RM5.80 to £1). There were two buyers for Aquarius House who paid £420,000 and £540,000 respectively for their smaller units.

The development on Battersea Reach started seven years ago and is expected to complete in 2014, while the project on St George Wharf, started 12 years ago. Battersea is located on 13 acres of ex-brewery land. It is next to Wandsworth Bridge SW18, with Chelsea SW3 and Fulham SW6 on the other side. Battersea will have 1,084 units, with 1, 2 and 3-bedroom units.

Everything in the Battersea building have been specked up with modern finishes and comes with fully fitted kitchen with electrical appliances. Both Battersea and Aquarius House have gone to India, Singapore, Hong Kong, Malaysia and United Arab Emirates.

A more affordable project by Berkeley group is Beauford Park in Colindale in the north, zone 4. Located on former aerodrome land, this 25-acre site across a police training grounds, will have 3,000 units of which 650 have been built. The project comes with 1, 2 and 3-bedroom units with price starting from £170,000 and goes up to £1mil for penthouses.

Says St George Central London Ltd managing director Ross Faragher, who is undertaking the project: “The market has been relatively difficult the past year and Beauford Park has been selling better than the rest of the group, at a rate of about five units a month.”

Faragher says the market picked up the last three months. Buyers comprise young professionals and first time buyers.

By The Star (by Thean Lee Cheng)

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