Capital assurance

July 20, 2012

Despite recent concerns over the Euro and the failings of many European economies, London still remains a safe haven for overseas buyers, with continued capital growth and strong yields.

Prime Central London remains the place to purchase for those with an unlimited budget. Our recent research tells us that developments which high net-worth clients are looking to buy were sold out during the first allocations made available in the first week of exhibiting in the Asia-Pacific region. Other notable successes include those close to key landmarks in Central London, many of which have already sold units prior to official launch. With some completions still four years away, it’s great value to purchase now. Meanwhile, more pocket-friendly developments are also doing strong business in the region, while mid-range developments where strong yields can be harder to achieve are struggling to sell.

Of course it is more than just the initial price that contributes to a development’s success or otherwise. The need for strong transport links remains key to the potential yield an investor can achieve. Typically a tenant will not want to travel more than 10 minutes to the nearest Tube/train station, easily overlooked if you are not familiar with an area. With the completion of Crossrail taking place over the next six years, it is important to look for property along this route. It is estimated that property prices near the Crossrail route (Tottenham Court Road, Canary Wharf, Farringdon) will increase by around 50 per cent by the time Crossrail is completed.

So what should the Asia-Pacific investor look to buy? Traditionally, two-bedroom apartments have been favourites among investors; however, research suggests that for the best long-term yields and capital growth, a one- or three-bedroom property will provide the highest returns with the minimum void periods. Many of the new developments offer a wide selection of two-bedroom apartments and if this is still your preferred choice, ensure you are buying over 750 sq-ft internal size, with two double sized bedrooms and two bathrooms. This will ensure good rental returns and a fast turnaround when it comes to finding new tenants.

By Chris Redfern

Director of Business Development

1st avenue

128 Metcalfe Court, West Parkside

London SE10 0EL

Disclaimer: Any views or opinions expressed in this article are those of the author and do not necessarily reflect or represent those of Landscope Christie’s International Real Estate.