Published: Friday September 9, 2011 MYT 8:43:00 AM
London's hotspot property prices to double
LONDON, Sept 9 (Reuters) Property prices in some central London hotspots are set to more than double by 2016, driven up by a mix of factors including volatile financial markets and major new transport projects such as Crossrail, according to a report from estate agency Knight Frank.
Domestic and overseas buyers have flocked to the London residential market in recent years as they look for a safe place to park their money.
"It's really seen as safe haven for global money. We ran some figures showing how prime property is doing in terms of asset classes ... it beat the FTSE 100 tracker over the last 10 years by quite a long margin," said Grainne Gilmore, Knight Frank's head of UK residential research.
"It certainly gives gold a run for its money," she added.
Meanwhile the Crossrail development, Europe's largest infrastructure project, will link Heathrow west of London to the east of the city through huge new tunnels to be run under the city.
"Crossrail is a massive theme going through this ... it's going to change a lot of things. If you live in Barbican or Farringdon (adjacent to the City financial district) you're going to be able to get to directly to three airports within minutes," she said.
As a result prices in this area and the City are set to rise 118 percent by the end of 2015, second only to the Vauxhall area in south London, where prices are forecast to jump 140 percent thanks to the redevelopment of Battersea Power Station along with U.S. plans to build its new London embassy just down the road.
The Knight Frank report added that there are 13 hotspots which will outperform even the 30 percent increase in prices expected in prime central London by the end of 2015.
But the gap between prime central London prices and the rest of the country is widening, as growth has already soared over 10 percent this year.
"There is a possibility we could see strong doubledigit growth by the end of this year ... the figures just keep getting stronger," said Gilmore.
House prices have fallen in all areas of England and Wales in the past 12 months, except London, with prices falling nearly 9 percent in the north east region, according to recent data from the Land Registry.
"We definitely wouldn't class what is happening at the moment as a bubble ... The fundamentals of the market in London are quite different to what they were in the rest of the UK (before the property crash)," Gilmore added, as buyers are cashrich and not reliant on cheap credit.
Even last month's riots have failed to put off buyers from all over the globe, which account for just under half of investors, said Knight Frank, attracted by the political and fiscal stability and high standard of education in the UK.
In a separate statement earlier this week, CB Richard Ellis said sales rates in London had improved for prime products and apartments with growth potential.
"The top end of the market is attracting such a wide range of buyers from all over the world that it is in effect insulating itself from any one economic cycle," said Jennet Siebrits, head of Residential Research at CBRE.
The highestselling develpment schemes so far in 2011 have had exhibitions in Asia as buyers in Hong Kong take advantage of a currency discount of about 20 percent.
Meanwhile major regeneration projects add nearly 5 percent to house prices in neighbouring areas, according to new research from CBRE, with the 2012 Olympic Games development lifting prices by 14 percent in the surrounding area.