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fru-gal

London Faces Surfeit Of Expensive New Homes

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http://www.ft.com/cms/s/0/79196466-a576-11e4-ad35-00144feab7de.html?siteedition=uk

A short quote from the article;

Most of the new homes being built are two-bedroom apartments in high-rise towers and many are being sold to “unsophisticated” foreign investors, said Charlie Ellingworth, the founder of Property Vision.

“It is unlikely that investors are going to see the sort of yields that they have been led to expect,” Mr Ellingworth warned. “The pool of buyers may extend to the whole of China, but the pool of tenants is pretty static.”

The owner of a £1m, two-bed flat would need to charge £30,000 to £40,000 a year in rent in order to make a gross return on their money of 3 to 4 per cent, Mr Ellingworth said. “There are not many people in London who can afford that.”

Edited by fru-gal

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To anyone who can't access the article TLDR:

54,000 shoeboxes are being planned or under construction in priciest areas of London, most priced at £1 million or more so that developers can break even (make a small profit as land values are also going right up). However, only 3,900 homes in this price range were sold in 2014 so article postulated there is going to be a glut of homes bought by Chinese "investors" and they would need to rent each home for £30k plus to make 3% etc, although many in the comments seem to think they are just buy and hold (empty) and don't care about yield.

Edited by fru-gal

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To anyone who can't access the article TLDR:

54,000 shoeboxes are being planned or under construction in priciest areas of London, most priced at £1 million or more so that developers can break even (make a small profit as land values are also going right up). However, only 3,900 homes in this price range were sold in 2014 so article postulated there is going to be a glut of homes bought by Chinese "investors" and they would need to rent each home for £30k plus to make 3% etc, although many in the comments seem to think they are just buy and hold (empty) and don't care about yield.

I thought that the Chinese didn't like to rent out properties as it was bad feng shui to do so. They're in it for the capital gains losses only.

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Hopefully the government can close the deficit :P by taxing some of these Chinese buyers on their empty investments. If they can afford to pay £1 million+ for a London shoebox, they can afford to pay more tax. Get them to pile in and then tax the crap out of them. It's also a vote winner.

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From what I gather, many Chinese buyers don't want to rent out their flats anyway. They like to keep them pristine.

can we not just move in ?, how would they know ?

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50,000 flats for 7,000,000,000 potential customers.

Keep waiting for the collapse of prices.

But they are only potential customers if they can afford / get a mortgage remember.

Of course it'll be the flats that have been built that'll be the first to go.... Period houses are still low in supply and always will be in London, but it's all relative....

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50,000 flats for 7,000,000,000 potential customers.

Keep waiting for the collapse of prices.

If there is so much demand, how come only 3,900 were sold last year for £1 million +?

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If there is so much demand, how come only 3,900 were sold last year for £1 million +?

Because smart investors were investing in stock, gold or oil. Now they cashed in ready to buy their London dream home.

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Because smart investors were investing in stock, gold or oil. Now they cashed in ready to buy their London dream home.

Is my sarcasm detector faulty? :unsure:

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No worries, I am sure Cameron is plotting a way to increase rents via subsidies to private renters.

Perhaps a free government supplied rental guarantee for every landlord paid from income tax?

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Errr .... Who are these 7m buyers? That's a very specific figure. Are you referring to the population of London, because if you are most of them have already got houses?

7,000 million. The world population is a potential customer base for a global city like London.

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Because smart investors were investing in stock, gold or oil. Now they cashed in ready to buy their London dream home.

Had to log in to reply to this -

With all due respect, smart investors are still in (german - all time high on the dax yesterday btw / euro) stox since everything else is way too illiquid and as for buying property in London at the current rates .. thanks for lulz.

Did you mean to write oil btw ? You must be a financial advisor, I take it ? :-))

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7,000 million. The world population is a potential customer base for a global city like London.

Well those Hargeisan goat herders have to put their winnings somewhere I suppose.

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