Did you know that almost 25 per cent of London’s new build market share belongs to Asian investors? It’s a statistic that reflects just how much interest there is in London’s developments from this corner of the globe. But how much of an impact has investment from Singapore and elsewhere in Asia really had on the capital’s development?
Re-shaping the market
Since the recession, overseas buyers have helped to sustain our native property market during times when domestic buyers were reluctant to come forward. Many investors from China and Singapore recognised the East’s interest in London has not only kept the real estate market afloat, but has also re-shaped the city’s urban landscape by fuelling new development trends.
High-rise condominium (‘condo’) properties, which contain shared facilities for residents, like gyms, are a logical choice for London developers who are tasked with making the most of the available space. Condo-style properties at the high end of the market were previously unseen in the capital but common in the East, and it seems that developers are producing plans with state-of-the-art facilities in mind to specifically attract Asian investors.
Why are Asian investors choosing London?
Investing in property here in London doesn’t come without an element of risk for Asian investors, but as one of the world’s largest and oldest financial centres, it’s widely known to be the city of choice for opportunistic property investors looking to expand into Europe. High-spec developments aside, private buyers are welcomed by developers who are seeking to solve London’s housing crisis, and thanks to the high demand for property in the city, investors can negotiate keenly priced deals and expect high yields from their investments.
Eastern relations are stronger than ever too. Knowing the potential for investment from the big powers in the continent, UK ambassadors have been keen to strengthen our country’s economic ties with Asia. This was exemplified by Boris Johnson’s widely publicised trade mission to Asia in December 2014, during which he revealed that the communal space at the centre of the newly-proposed Battersea Power Station development is to be called ‘Malaysia Square’ in homage to the native property developers who made the new works possible.
The impact on affordability
Although increased investment in the capital will ultimately lead to more homes and facilities for residents, many have raised concerns that overseas investment on such a significant scale is in fact driving up the cost of property and pricing our own investors out of the market. Inflation is expected to rise to 15% by the end of 2015, way above the forecasted 8.5%, and some domestic companies are ill-equipped to compete with international investors at these kinds of rates.
However, with the population of the capital set to exceed 10 million by 2030, it’s clear that our developers need to embrace international offers if they are going to meet the demand for homes in London and strengthen the city’s positioning in the global property market.