Homes in the same postcode as ambitious London property development Nine Elms are largely being sold for less than their initial asking prices, Simon Morris recently learned.
London Property Development
It has long been clear that investors believe that London property development has the ability to generate significant return on investment. This is why, as was previously reported here on the Simon Morris blog, buyers are rushing to purchase land to develop in London.
As the UK’s most robust economy, London is incredibly popular with domestic and international residential property buyers alike. As Simon Morris previously discussed, popular London property developments such as Maine Tower block in Canary Wharf, which was developed by Galliard Homes, see their properties sell out within minutes.
Yet a new report from City A.M has now indicated that not all London property developments are set to be as popular as Maine Tower. The site said that half of homes in SW8, the area where ambitious London property development Nine Elms is being built, were reduced in price before they were sold.
Figures from real estate data provider Lonres indicate that only 17% of new builds in SW8 have been sold above or at their initial asking prices. Meanwhile a third of residential properties in Nine Elms have already been on the market for over year, whilst the same can only be said for 12% of residential properties in the ‘prime’ areas of the UK capital.
Tom Bill, Knight Frank’s head of London residential research, suggested that recent economic events in China could disrupt the market further. He said that “China’s currency devaluation… has caused some buyers to postpone decision-making until there is a greater sense of certainty.” Yet Frank added that “there is evidence Chinese buyers have stepped up their interest in ‘safe haven’ global property markets like London and are increasingly looking for homes in ‘golden postcode’ neighbourhoods like Mayfair.”
This news very clearly indicates that blanket investments in London property development won’t give investors the opportunities they need to generate a good return on investment. Buyers like some areas of the UK capital more than others, so investors should think about the specific location of their investment carefully, before they get involved in London property development.