Overseas investors will start London recovery

Overseas investors will start London recovery

19 December 2008

Yolande Barnes, head of residential research, Savills, comments: "London’s prime markets are starting to look very cheap by recent standards. With sterling losing value against most of the major world currencies, this leaves it looking good value by international standards in particular.

"Over the past few weeks, clear indicators have begun to emerge of the forces essential to drive eventual market recovery. In previous downturns, it has always been overseas investors who pulled the prime London property market out of the doldrums. An analysis of the combined effects of the housing market and currency fluctuations shows that prime London properties would now cost 50% less to a new Japanese investor and 40% less to a Hong Kong, Singaporean, Taiwanese, Swiss or Eurozone investor.

"With global property bargains like these, the start of the recovery may well be driven by equity rich investment from the Far East or Europe.

"Equity-rich, longer-term recovery buyers will start to emerge in 2009 provided the effects of the credit crisis aren't seen as doing long-term damage to London's reputation as a global city.

"If properties start to be snapped up, good-quality supply could become scarce quite quickly as discretionary vendors won't want to put their properties on the market. This sets the scene for the start of a price upturn in 2010 - 2011.

"We shouldn't underestimate the potential attraction of bricks and mortar continuing to provide a relatively safe haven, particularly for owners from less financially and politically stable countries, and in the face of falling/uncertain stock markets and a global lack of confidence in other financial instruments".

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