VIDEO: London could be a victim of its own success if demand for investment properties forces yields to unsustainably low levels, Savills’ head of central London investment has warned.
Speaking at Estates Gazette’s Global Real Estate Debate at the London Real Estate Forum today, Stephen Down said that falling yields had already put off some Chinese investors.
TH Real Estate’s Mike Sales echoed the concern that there may not be enough assets for everybody because a lot of long-term overseas investors are looking for the security and certainty that London provides.
Architect Eric Kuhne said: “No matter where you are in the world, the benchmark is always London.”
Realstar Group vice chairman Ryan Prince added that when choosing a place to live, “there’s London, New York and everywhere else”. He said that the change in London over the past 20 years had been like night and day, particularly in terms of restaurants, retailing and hotels. “But where to invest is a much harder question. There is way more capital than supply and available return.”
However, demand for London property is not necessarily a simple decision based on rate of return. Linklaters partner Simon Price suggested that transparency, political stability, the English legal system and soft infrastructure such as professional people are key attractions that add to the pressure.
Prince said the biggest challenge for London is providing enough homes for the people that want to work in the city while maintaining their quality of life.
Sales echoed this sentiment: “We have to find a solution to keep as many people in the city as possible.”
Transport was also in the firing line. Price pointed out that Crossrail was first conceived in the 1940s, for instance. But Prince was positive. His perspective of the oft-criticised transport system in London is that it compares favourably with the best in the world. He compared it to Los Angeles, where he said you would never consider crossing the conurbation to go to work.
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