Over the years, Britain has been seen as haven for foreign investors who are searching for fair returns in housing. In the the wake of an economic crisis though, this status symbol may soon be coming to an end as reported in Breaking Property News.
Battersea, a largely residential inner-city district of south London, has been thought of as the heart of the property bubble- with the city's forest of cranes as well as the mushrooming of apartments-making London into Great Britain's very own Monaco according to a news article in Independent.co.uk.
Nevertheless, the rumblings that emanate from within a group of investors and brokers may threaten the legions of foreign investors who are responsible and credited for the city's long-standing luxury property boom. These foreign investors may consequently be getting cold feet and might start backing out.
"We are witnessing softening of interest among buyers from Malaysia and southeast Asian regions, probably due to the prevailing volatile currencies and uncertainty in economic outlook. No exchanged contracts have been cancelled to date," claimed Sime Darby, a major stakeholder who owns 40% of the Battersea redevelopment project. Malaysia and other Southeast Asian countries were dubbed "Singapore on Thames" as they were responsible for the 'spending splurge'.
As Knight Frank put it in the same Independent.co.uk article, 'purchases of prime London homes by Russians had fallen to 2.9 per cent of the total in the first six months of 2015, compared to 6.7 per cent in the previous period. Singapore-based buyers more than halved to 1.4 per cent and Chinese investors dropped to 9.4 per cent from 10.9 per cent.'
A London School of Economics emeritus professor of economic geography, Paul Cheshire, asserted that "conditions in financial markets and such low interest rates have converted property and especially top-end housing into an investment asset - yields are so low on such a wide range of assets. "Given the very inelastic supply of housing in Britain in general and in London in particular... there is [now] a lot of risk in housing in England and the top end in London in particular."
A strong evidence of a wave of "flat flipping" in the Nine Elms area started to emerge in the previous month. Developers are apparently selling 18,000 new homes over the next decade as reported in Independent.co.uk. Their reason: 'investors who paid a 10% to 20% deposit sell on their not-yet-built property during a prevalent concern that a lot of the properties have been bought as currency speculation "plays" by Asian investors, and that prices are more likely to fall as they try to cash in.' This creates an impression that London property now becomes a very risky buy.
