By Andrew Batt:
More than 87 percent of prime residential property purchases in London are being made in cash, according to a new market report published by EA Shaw.
According to the report, 61 percent of purchases are being made for investment purposes, while transaction levels increased by four percent compared with Q2 figures.
Lisa Hollands, Head of Residential at EA Shaw, said: “With the global economy continuing to show signs of volatility, international purchasers are still searching for a safe haven for their wealth. Central London property is still seen as a good investment, especially as capital values are on course to rise around seven percent this year. We anticipate considerable interest from purchasers in a number of new build and refurbished developments that are expected to come to the market in Q4, as demand continues to outstrip supply in the area, and buyers are still hungry for high specification, well located homes.”
A new record price for re-sales was achieved of £1,699 (S$3,325) per sq ft, beating the previous quarter’s record, showing the strength of the Covent Garden market.
U.K. buyers were the most dominant sector of the market over the summer, accounting for 56 percent of purchases, a 23 percent increase compared to the previous quarter. New build purchases made up 56 percent of total sales with U.K. buyers being particularly active in this market, accounting for 79 percent of purchases.
Central London residential rents rose three percent during Q3 2012, an increase of 12 percent compared to the same period in 2011, according to EA Shaw.
Demonstrating the strength of the Covent Garden and surrounding areas’ lettings market, EA Shaw achieved a record rent of £64 (S$125) per sq ft for a 357 sq ft flat in Floral Street, when the average rent normally achieved is from £45 to £55 (S$88 – S$108) per sq ft. The bijou property was let at £440 (S$861) per week, a four percent increase above the level set six months ago.
The highest rent per week in the area was also set last quarter, when the team achieved a record overall rent of £3,600 (S$7,046) per week, 52 percent more than the previous record.
Hollands added: “The central London lettings market continues to go from strength to strength with demand far outstripping supply. This is particularly the case with new build, as new stock is often let within hours of coming to the market.”
Transaction levels in terms of rental deals done rose by 31 percent compared to the last quarter and eight percent more than the same period in 2011. The average rent increase of renewing tenants in Q3 was four percent. On the demand side, the tenants mainly comprised of students and those working in the accounting and finance sectors.
The number of students renting rose significantly, up 40 percent compared with the same period in 2011. During Q3, there was a 16 percent rise in European tenants, mainly attributed to students looking for accommodation before the start of university. Of employed tenants, finance was dominant at 32 percent of all tenants.
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