Arab property investors are now entering London’s property market in the hope this time of snapping up bargains from distressed sales. Areas outside the centre of the capital, namely Vauxhall and Nine Elms, are being targeted according to property industry sources. In the South London area, new-build luxury apartments continue to flood the market. Figures from LonRes reveal that there are 10,937 homes currently under construction, or with planning permission there, many of which are luxury flats priced out of the reach of ordinary Londoners.
With low levels of transactions and high prices, there is a dearth of buyers. The average price per square foot of homes for sale in the area was 6.2% lower in the second quarter of 2017 then the same period last year. Investors, many of them wealthy individuals looking to buy apartments in bulk, off-plan, directly from developers, are biding their time and waiting for the market to become even weaker, according to Charlie Ellingsworth, of buying agent Property Vision. He said, ‘low interest rates have meant that there are few distressed sellers yet, nor any pressure to take losses.’
Samuel Bikhit, chairman of buying agent Kay & Co., said: ‘There is an oversupply of properties in this area,’ adding,’ that when construction completes, there will be an oversupply of rental properties, meaning investors may not see the return they are hoping for.’ Across London, more newly built homes will complete unsold this year than at any time over the past decade, according to data from Molior. This is due to low level of sales and a record number of homes that are being built this year in the capital.
Camilla Dell, MD of buying agent, Black Brick, said: ‘the Middle-Eastern buyers are largely from the UAE, Jordan, Saudi Arabia and Egypt,’ adding that recently she ‘has had far fewer enquiries from Qatari investors due to the ongoing crisis there. Some foreign buyers, particularly Europeans, have been put off by higher levels of stamp duty and uncertainty surrounding Brexit.’
My view is that this situation is unlikely to improve unless a united government is in place pretty soon and more hopeful signs in the economy begin to emerge, and a flicker of entente cordiale were to appear in the negotiations taking place with the EU. Let’s at least pray this will manifest itself in the coming months.