Many people who make property investments in London are not doing so to generate significant returns on their cash, but in order to preserve their wealth. This is the assertion of Ed Mead, director at Douglas & Gordon, who explained the fact that real estate in the city maintains its capital values is the "the principal draw for central London property". He pointed out the best gross yields investors can expect from this asset class are between four and five per cent, adding "you are not buying for investment; you are buying because it is a very good defensive play".
Mr Mead observed many investors are wary about putting their money into other avenues, such as the stock market, due to the volatility of other assets. By contrast, real estate in central London is delivering "a small but solid income" and offers "a relatively good hedge against capital value depreciation". A report published recently by Savills indicates prices will remain stable in the London property market over the course of 2012, with the flow of money from international investors not expected to dry up any time soon. Yolande Barnes, head of residential research at the organisation, commented: "We think that the old world cities - particularly those long established as safe deposits of wealth such as London, Paris and New York especially - may sustain pricing over the coming year, with the influx of global wealth in an uncertain world still having some time to run."
It seems the market for prime property assets in London is likely to become even more competitive over the course of this year, with Cluttons noting earlier this week that stock levels fell by 25 per cent at the beginning of 2012. The firm revealed demand for real estate in the UK's capital is close to record levels, while supply remains restricted. As a result, many properties in sought-after areas sell within hours of coming on to the market. Partner for residential sales at the company Charlie Noel-Buxton added the underlying level of demand for homes in the city is far greater than the registered number of potential buyers.
- Thursday 23 February 2012