London’s new build market
By Jo Eccles
A recently published report showed that prime central London has over 20,000 new properties due to be released over the next 10 years, and the value of these properties is estimated to be in the region of £50 billion. This is great news for developers (whose profits are rising quickly), but is it good news for the London property market as a whole?
Currently most of the new build developments are launched in Asia, ahead of the UK. This is because there is a seemingly insatiable appetite for London property from expats and locals based in countries such as Hong Kong and Singapore. This is usually linked to favourable exchange rates, and also the London property market looking like a very stable and profitable place to invest.
The developers will usually fly out to the region with a team of solicitors, property managers and salesmen, accompanied by slick models of the developments and marketing material. It’s often only when – or if – there are unsold units after the road show that the development will be launched in the UK. The problem is that a high proportion of these off plan properties are being sold as investments, which means that the overseas owners plan to rent them out. This is great news for tenants as it often means there is a lot of choice within the new developments because landlords are forced to compete against other landlords with identical properties. This was evident with a recent rental client of ours – there were five (almost identical) properties to choose from in the same building, each owned by a Singapore based landlord. We made very low offers on each and one of the landlords eventually accepted.
So if you’re a tenant, this influx of development is good news and you can make the most of the situation. However, if you’re a buyer, whether it’s for yourself or an investment, I would urge strong caution buying in a large scale new build development. If you do want a modern block then try to opt for a smaller development where you’ll face less competition from other owners when you do come to rent out or sell the property.
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