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Outlook Positive for Prime Central London Property

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United Kingdom  Bank of England  real estate market  Middle east  Cluttons  London  Knight Frank  Liam Bailey  Far East  Sue Foxley  residential research 

Outlook Positive for Prime Central London Property

By - Wednesday 29 August 2012

The prime central London real estate market is expected to perform well over the next six months, with interest from overseas buyers helping contribute to the anticipated 3.2 per cent price growth in 2012. This is among the predictions made by Cluttons in its latest Residential Property Forecast: Q3 2012, with the firm noting that one of the reasons why international investors continue to target the UK's capital is the weakness of sterling. The current exchange rate means buyers from nations in the Far East can now pick up properties for 60 per cent less than they could in 2007, while investors coming from the Middle East have seen prices drop by 30 per cent as a result of the falling value of sterling.

Sue Foxley, head of research at Cluttons, explained it is not only overseas buyers who are going to boost London's real estate market in the coming months, though. "A growing mortgaged first-time buyer market means that we are likely to see increased competition for properties at the lower end, which will have a far-reaching effect on the whole of the supply chain. The Bank of England's Funding-for-Lending scheme also appears to be re-energising the debt financing market, which is very positive news," she stated.

Although the outlook is bright for property values, it is not as rosy for rents. Cluttons is anticipating a one per cent drop in central London rents, due to the "unsustainable rental growth seen in 2011". This is similar to the findings of Knight Frank, which recently revealed the value of rents in the prime districts of the city fell 1.1 per cent in July, compared to the same month a year earlier. Liam Bailey, head of residential research at the firm, attributed the decline, in part, to the reduction in jobs in the financial services sector and the overall slowdown in the UK's economy. Despite rents dropping, Mr Bailey pointed out there was a 30 per cent increase in the number of tenancies being agreed in the city in July on an annual basis.

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