There has been an influx in foreign investors trying to get into the London real estate market recently, according to one estate agency based in the capital. WA Ellis revealed that it has been receiving high levels of enquiries from buyers in Greece, Russia, China and India, all of whom are hoping to take advantage of the city's robust property sector. In particular, the firm noted that there has been a shift towards the residential sector, with such assets increasingly been considered as "a long-term safe bet with strong income returns and stable yields".
One of the reasons given for this influx in foreign money is the fragility of the global economy, with the organisation commenting that there appear to be "fewer stable ways to invest" at present. And it is not only WA Ellis that has noticed investors are attracted to the strong performance of London residential property, Townends estate agents recently pointed out that consistent rises in rents are having a positive impact on yields. Group lettings director at the organisation Caroline Kavanagh explained that the strong demand for rental properties has been driven by high house prices and a lack of mortgage finance.
In terms of what returns investors can expect to generate from a residential property, Ms Kavanagh stated: "When looking at London, a general rule of thumb in the current climate is anything from a 4.5 per cent yield up is good. Having said that, there are 'better than good' opportunities out there." She specifically mentioned locations in south London, where yields of up to six per cent are being realised. Ms Kavanagh also stressed that potential investors will discover real estate offers greater security than other vehicles at present and she advised those with the funds available to consider expanding their property portfolios in order to generate the best return for their money.
- Wednesday 28 September 2011