The recent rush to buy flats in a new Canary Wharf development, has shown Simon Morris how investors can reap significant returns from London property development.
London Property Development
New figures from CBRE, the world’s biggest property adviser, have shown that property developers are rushing to buy land in London. As previously reported on the Simon Morris blog, these statistics indicate that buyers spent £1.8 billion on land to develop in the central district of the UK capital in the second quarter of 2015; a rise of 118% year-on-year.
The recent sale of flats in the Maine Tower development in East London’s Canary Wharf, has shown how developers can secure significant return on investment when they buy land in the UK capital. The 41 storey Maine Tower block was developed by Galliard Homes, who put the project’s 297 studio, one, two and three-bedroom flats up for sale in July 2015.
The prices for these flats ranged from £350,000 to £1.25 million. According to the Evening Standard, Galliard Homes managed to sell 208 of these homes within the first four hours of Maine Tower’s launch day. This allowed the property developer to rack up £35 million worth of sales per hour (£580,000 per minute); a new record for the London housing sales sector.
Confidence in the London market
The sales director at Galliard Homes, David Galman, recently commented on the rush to buy flats at Maine Tower Galman. Galman said: “It’s not every day in London that a residential skyscraper sells out during a launch.
“The volume and speed of sales at the Maine Tower launch was incredible and shows the confidence that buyers from both the UK and overseas currently have in the London market.” Data shows that half of Maine Tower’s buyers were from overseas. Chinese investors were responsible for the sale of 50 of the flats, which they purchased at a sale day in Hong Kong.
Return on investment
The record sale of flats in the Maine Tower project shows that developers can secure serious return on investment when they invest in to London property development. This is because the UK capital, especially areas in its central district such as Canary Wharf, are desirable locations for domestic and overseas home buyers, who want to live in one of the most prosperous cities in the world.
However, as Simon Morris has recently explained, investors should think long and hard before entering the UK capital’s property development sector. Morris said that “it’s expensive to develop property in the UK’s capital city and the development costs are rising rapidly.” Therefore, investors “should take these factors into account and calculate risk vs. reward” before investing in London property development.