With property prices stable and rents at an all-time high, international demand for new homes in London continues to rise.
The latest Central London Residential Market report published by Jones Lang LaSalle (JLL) shows that overseas nationals continue to view the London property market as a safe investment haven.
Last year, the company says that it sold in the region of £1.3bn worth of new build homes in London to foreign purchasers, with the greatest hike in demand coming from home-buyers based in the Middle East.
The report shows that property investors from the Middle East accounted for about 9%, up from 5% in 2010. The Middle East now accounts for the second largest group of foreign investors into the London residential market after nationals from the Asia Pacific region who accounted for 15% of overall sales.
Despite wider concerns about the UK economy, the London property market, particularly in Zone one, continued to perform strongly in 2011, with property prices appreciating across most parts of the capital, fuelled by a chronic undersupply of residential properties in relation to the high number of national and international homebuyers looking to find a property in the capital.
Home prices in London are expected to rise further in 2012. JLL projects that Central London prices could grow by 4% this year, 5% in 2013 and peak at 8% in 2014. Rents are also expected to increase by 7% by the end of 2012 and 8% in 2013; an attractive proposition for property investors.
Although research shows that two-bedroom homes in London are recording the greatest capital growth, JLL report that the majority of Middle Eastern investors are primarily looking for large family homes with three- to four-bedrooms, ranging in value from £2.4 to £15m.
Ben Stroud of Jones Lang LaSalle said: “Middle Eastern investors have strong historic links to the London property market and have typically invested for the longer term. We are definitely seeing increased interest both in terms of volume as well as the variety of locations that regional investors are interested in.
“London continues to offer solid growth potential and its twinned status as an accessible capital city and financial centre, alongside a stable political system and transparent legal framework, continues to attract interest from across the Middle East.
“London’s reputation as a safe haven for investors is being reinforced by global troubles not undermined. Additional incentives such as a weak Sterling and a favourable tax system are also making it more attractive amongst a range of potential foreign investors.”Source: whathouse.co.uk