Find out what’s happening in the property investment arena both in the UK and internationally
Foreign Buyers Swoop On London Property
February 24, 2009Article by Ray Withers
Estate agents are reporting a feeding frenzy from overseas investors looking to pick up bargain basement London property investments. Some agents report inquiries are up 55% on recent months as overseas buyers pore over property listings for investments that are even cheaper to non-UK residents as the Pound struggles against the US dollar and the Euro. Distressed assets – or properties on sale below market value – are the main targets for hungry buyers wanting London investment property.
“These guys obviously feel prices are bottoming out in the UK,” said one agent. “The weak Pound and low prices are combining to make the current market an ideal investment.” Most buyers are from the Middle East, the US and surprisingly, European countries like Norway and Poland. If you are looking for a good return on a below-market-value buy-to-let in the capital, the sort of property that should attract attention are two bed roomed townhouses at Shrubbery Mews, Streatham, London.
Certified by independent surveyors as priced at 20% below market value at £300,000, this small eight house development is a private, gated community with manicured lawns just a few minutes away from all of London’s major business, shopping and entertainment centres. The properties were initially scheduled to go to market for £475,000, but are now down valued to £375,000. The developers are offering a £75,000 discount to give such a low selling price that is rumoured to be below build costs, to release capital tied up in the project.
All the properties are finished to a high specification, with a hall, open plan living space and cloakroom downstairs plus two double bedrooms and a family bathroom upstairs. Five off-street parking places are available at an additional £5,000 each. The properties are projected to gross £18,000 per year rents, giving a gross yield of 5% to 5.7%, depending on whether the investment is managed by a letting agent or the local authority. The buy-in cost for the development is £87,000, comprising a 25% deposit and purchase costs. The purchase can be financed with a 75% loan-to-value mortgage, subject to status.
Shrubbery Mews is south of the River Thames in a traditional residential area, but only a short walk from a station and within 20 minutes travelling of the City. Falling mortgage interest rates are likely to increase yield for London real estate investments and give investors rental profits as the housing market flattens out and starts to rise again, leading to capital growth.