Two Asian billionaires snap up Aviva's London HQ
The buyers, Kuok Khoon Hong and Martua Sitorus, are founders of the world's largest palm oil processor, Wilmar.

REAL ESTATE RECOVERY STRATEGY The building occupied by Aviva generates a net annual rental income equivalent to 5.42% of the purchase price

Kuok Khoon Hong and Martua Sitorus, the billionaire founders of the world's largest palm oil processor, bought Aviva Plc's headquarters building in London for £288 million (S$580.8 million).

The purchase is a private investment and separate from Singapore-based Wilmar International Ltd, the US$27.5 billion agricultural business Mr Kuok and Mr Sitorus founded 20 years ago, Elaine Lim, managing director at Wilmar's external public relations firm, Citigate Dewe Rogerson, said by e-mail.

The property occupied by Britain's second-largest insurer is the last office tower out of nine in the City of London financial district formerly owned by Simon Halabi.

CB Richard Ellis Group Inc, acting as the special servicer of the debt secured against the properties, announced the sale yesterday without identifying the purchaser.

The pound's weakness has attracted international investors to prime real estate in central London, where a shortage of new developments is lifting office rents.

Overseas buyers accounted for 55 per cent of the £2.43 billion of office building sales in central London in the first three months of this year, according to figures compiled by Stafford-based Property Data.

Mr Kuok, the 61-year-old chairman and chief executive officer of Wilmar, is Singapore's second-richest individual with a personal wealth estimated by Forbes in March of US$3.2 billion. He is the nephew of Robert Kuok, the Malaysia-based billionaire.

Mr Sitorus, 51, is Wilmar's chief operating officer and Indonesia's fourth richest person with US$2.7 billion.

The building occupied by Aviva generates a net annual rental income equivalent to 5.42 per cent of the purchase price, according to CB Richard Ellis.

A total of £1.1 billion excluding expenses was raised from the sale of nine buildings owned by Mr Halabi before a June 2009 default, the broker said by e-mail.

The nine-building selloff may provide a blueprint for recovering money in other property loan defaults, CB Richard Ellis said.

Moody's Investors Service said that 92 collateralised mortgage-backed securities in Europe were in special servicing at the end of April, worth 13.8 billion euros (S$24.8 billion).

The most, by value, were backed by properties in the UK, including the Halabi loans.

The sale 'will hopefully become a benchmark to what can be achieved', said Stephen Hubbard, CB Richard Ellis's chairman of real estate finance.

Sales of the nine buildings show 'how important a successful real estate recovery strategy is to the value and risk of the debt instruments'.

A slump in UK property values triggered a default on Mr Halabi's loans two years ago.

In August 2009, CB Richard Ellis was given the task of returning as much money as it could to holders of the five classes of notes sold by Mr Halabi's White Tower 2006-03 Plc and junior lenders.

The office towers owned by Mr Halabi were valued at £1.83 billion on October 2006 after the loans were packaged into £1.15 billion of CMBS.

An additional £300 million of junior loans weren't securitised.

The value of the towers sank to £929 million in June 2009 after credit markets froze following the bankruptcy of Lehman Brothers Holdings Inc nine months earlier.

Paul Lewis, a director at CB Richard Ellis's loan servicing arm, said it was too soon to say how much of the recovered funds can be returned to note holders and junior creditors. --2011 June 4     Bloomberg

• High-End London Properties in demand
• Asian purchases slowing down

In the past months, Asian investors - specifically investors from Hong Kong and Singapore, both of which are experiencing rapidly expanding economies -have snapped up £120 million, or $194 million in US dollars, in London real estate. Most purchases range between £400,000 and £1 million.

Hong Kong investors accounted for 24 percent of all purchases of newly-built properties in London, giving it a larger market share than any other Asian country. Singapore takes second place in the market with 12 percent of new home purchases, and mainland China falls third with 10 percent of the market.

While Hong Kong’s 70-percent increase in housing prices since 2009 is a staggering example of the growth of Asian markets, Singapore and mainland China are also high-growth areas. Singapore housing prices have reached record highs, and based on the first three months, the island’s economy is expected to grow 23.5 percent this year. On mainland China, home prices rose 28 percent in Beijing and 26 percent in Shanghai last year, according to SouFun Holdings Ltd., the company behind China’s largest real-estate website.     >> MORE

• Concern about the high street
• Landlords could be hit by the EU crises
• Luxe market benefits by international uber rich

Chinese tourists poised to splurge in UK

Chinese tourists are expected to spend £260 million (S$525.4 million) on luxury products in visits to the UK in 2011, up 30 per cent from a year earlier, said Bruce Dundas, president of retail adviser London Luxury.

'China is a hugely emerging market in terms of travelling,' Mr Dundas said in an interview yesterday in Shanghai. 'We have an enormous increase of visitors over the last two to three years and an enormous increase in spend.'

London Luxury offers advice on Chinese consumers to about 300 luxury-goods retailers in the city's West End district, including Burberry Group plc, the UK's largest luxury retailer, and LVMH Moet Hennessy Louis Vuitton SA, the world's largest maker of luxury goods, he said.

It also provides services such as heritage tours to high-end tourists visiting the city. Chinese shoppers spend an average of £600 per transaction in the UK, he said.

Customers from the Greater China region, which includes Hong Kong, Macau and Taiwan, will account for 44 per cent of global luxury-goods sales by 2020, up from 15 per cent now, CLSA Asia-Pacific Markets forecast in January.   --  2011  May 25   BLOOMBERG

• Asian shoppers in UK spend £533 per visit
• Asian investors dominate Central London buying
• Full service luxury residential for the Ultra Rich in London
• Joseph Lau, who has a £2.5 billion fortune based in Hong Kong, spent £33m on a six-floor mansion in Eaton Square, Belgravia   - 2010 January
• His Chinese Estates just bought Goldman Sach's hq in London
• Hong Kong buyers dominate London buying

   -- 2011 June 15     PROPERTY POST

Two billionaires snap up Aviva's London HQ

The buyers, Kuok Khoon Hong and Martua Sitorus, are founders of the world's largest palm oil processor, Wilmar

• Aviva's London HQ sold to undisclosed foreign investor

Kuok Khoon Hong and Martua Sitorus, the billionaire founders of the world's largest palm oil processor, bought Aviva Plc's headquarters building in London for £288 million (S$580.8 million).

The purchase is a private investment and separate from Singapore-based Wilmar International Ltd, the US$27.5 billion agricultural business Mr Kuok and Mr Sitorus founded 20 years ago, Elaine Lim, managing director at Wilmar's external public relations firm, Citigate Dewe Rogerson, said by e-mail.

The property occupied by Britain's second-largest insurer is the last office tower out of nine in the City of London financial district formerly owned by Simon Halabi.

CB Richard Ellis Group Inc, acting as the special servicer of the debt secured against the properties, announced the sale yesterday without identifying the purchaser.

The pound's weakness has attracted international investors to prime real estate in central London, where a shortage of new developments is lifting office rents.

Overseas buyers accounted for 55 per cent of the £2.43 billion of office building sales in central London in the first three months of this year, according to figures compiled by Stafford-based Property Data.

Mr Kuok, the 61-year-old chairman and chief executive officer of Wilmar, is Singapore's second-richest individual with a personal wealth estimated by Forbes in March of US$3.2 billion. He is the nephew of Robert Kuok, the Malaysia-based billionaire.

Mr Sitorus, 51, is Wilmar's chief operating officer and Indonesia's fourth richest person with US$2.7 billion.

The building occupied by Aviva generates a net annual rental income equivalent to 5.42 per cent of the purchase price, according to CB Richard Ellis.

A total of £1.1 billion excluding expenses was raised from the sale of nine buildings owned by Mr Halabi before a June 2009 default, the broker said by e-mail.

The nine-building selloff may provide a blueprint for recovering money in other property loan defaults, CB Richard Ellis said.

Moody's Investors Service said that 92 collateralised mortgage-backed securities in Europe were in special servicing at the end of April, worth 13.8 billion euros (S$24.8 billion).

The most, by value, were backed by properties in the UK, including the Halabi loans.

The sale 'will hopefully become a benchmark to what can be achieved', said Stephen Hubbard, CB Richard Ellis's chairman of real estate finance.

Sales of the nine buildings show 'how important a successful real estate recovery strategy is to the value and risk of the debt instruments'.

A slump in UK property values triggered a default on Mr Halabi's loans two years ago.

In August 2009, CB Richard Ellis was given the task of returning as much money as it could to holders of the five classes of notes sold by Mr Halabi's White Tower 2006-03 Plc and junior lenders.

The office towers owned by Mr Halabi were valued at £1.83 billion on October 2006 after the loans were packaged into £1.15 billion of CMBS.

An additional £300 million of junior loans weren't securitised.

The value of the towers sank to £929 million in June 2009 after credit markets froze following the bankruptcy of Lehman Brothers Holdings Inc nine months earlier.

Paul Lewis, a director at CB Richard Ellis's loan servicing arm, said it was too soon to say how much of the recovered funds can be returned to note holders and junior creditors.   -- 2011 June 4  BLOOMBERG

• UK's most expensive residential real estate
• Top Neighbourhoods
• London's rich sell as Foreign money moves in
• Roman Abramovich's home
• Property surrounding the Olympics
• Royals sell 25% Regent Street retail property
• Commercial property prime
• Claridge's might be for sale
• Wealthy Indians flock to the UK to shop
• London -- Shopping Capital of the World
• Bulgari residences - to ready for Olympics

The world's most expensive penthouse is the one at One Hyde Park for £140 million.    The location in prestigious Knightsbridge is between Harrod's and Harvey Nichols.

• £135m for flat at Candy & Candy's One Hyde Park - all cash!

   GLOBE & MAIL     2011 May 8

DEALS

• British Land, Blackstone develop 700,000 sq ft at 5 Broadgate for UBS
• International investors
• British Land and OMERS in "Cheesegrater" development deal   >>  ANOTHER
• Largest Commercial Property Deals of 2010
• Dubai World default on £200 million

London luxury home prices to climb 8%

Central London luxury home prices will increase by 8 per cent this year as overseas buyers take advantage of a weak pound, broker Savills plc said, reversing a November prediction that values would fall.

The average price of a home costing at least £3 million (S$6 million) and located in neighbourhoods such as Knightsbridge and Belgravia rose 9.6 per cent in the second quarter from a year earlier, Savills said. The quarterly gain was 3.4 per cent.

'Overseas demand has been much stronger than we expected,' Lucian Cook, a researcher at Savills, said in a telephone interview. 'The big unknown is what happens in Greece - will it be a catalyst for more demand because of the outlook for the euro region?'

Buyers based outside the UK have been competing over a below-average number of properties for sale in central London as they seek a haven for their wealth amid political and economic uncertainty at home.

The pound's 25 per cent slide against a basket of other currencies since the housing-market peak in late 2007 has made London real estate more attractive.

In November Savills forecast a one per cent decline for luxury apartments and houses in central London, predicting a pick-up in the number of properties for sale and saying deteriorating economic conditions would deter British buyers.

Overseas buyers accounted for 72 per cent of prime central London property purchases in the first quarter, compared with 60 per cent three years earlier, according to Hamptons International.

British owners accounted for 55 per cent of prime property sales in the city's centre.

Instead of reinvesting in the same districts, they tended to move to more affordable neighbourhoods within the capital, said Adam Challis, head of research at Hamptons.

Savills predicts that prices of homes valued at least £1 million across the capital will probably rise by 6 per cent this year, reflecting the shift and the gentrification of neighbourhoods, particularly in south-west London. --2011 June 28   Bloomberg

Price of London's super- prime homes rise

Prices for London's most-expensive homes probably will rise as much as 10 per cent this year as overseas buyers compete for a limited number of available 'super-prime' properties

Prices of apartments and houses costing more than £10 million (S$20.7 million), most of which are near Hyde Park, rose about 8 per cent last year, the London-based property adviser said yesterday in a report.

'There have been a number of very significant sales in the first few weeks of the year, which point to the depth of wealth which is looking to buy into the top end of the London market,' Knight Frank said in the report. Buyers from 50 different countries bought homes through the brokerage last year, up from about 30 in 2008, it said.

London's super-prime market is attracting international investors seeking to protect their wealth from financial or political volatility at home, Knight Frank said.

Buyers from Russia and other former Soviet republics will boost their share of the market from 14 per cent last year, the firm's brokers predict. Chinese and Indian buyers also are likely to increase their ownership proportion, while instability in the Middle East probably will build demand from that region, Knight Frank said.

'With inflation rising in Asia, the desire to add tangible assets to wealth portfolios is proving itself to be a key driver of demand,' according to the report.

The financial crisis made it harder for luxury-home developers to finance projects, limiting the number of new high-end residences for sale.

Six apartments at One Hyde Park, the luxury condominium complex in Knightsbridge that opened last month, sold late last year at record average prices of £6,000 a square foot, according to Nick Candy, who oversaw the project with his brother Christian. He wouldn't give their size.

London's status as the world's most desirable residential market may be eroded by the 'popular backlash against wealth', which has helped lead the government to raise taxes for the most affluent, Liam Bailey, Knight Frank's head of residential research, said in the report.

Increased competition from such Asian cities as Hong Kong and Singapore also may undermine London's position as the top global financial centre, he said. -- 2011 February 22   BloombERG

Central London is in high demand still

Brokers report stronger activity from non-UK capital sources, such as sovereign wealth funds and overseas investors, looking at good quality retail assets across the UK, and in particular, in Central London.

Notable recent transactions include the purchase of Park Place (mixed-use development) on Oxford Street, London, by Qatari's Barwa Real Estate from Land Securities for £250 mln.

The largest UK shopping centre investment transaction in H1 2010 was Meyer Bergman's purchase of a 50% stake in the Bentall Shopping Centre in Kingston-upon-Thames in Surrey, for around £130 mln.

• British Land and Carphone Warehouse  - Drake Circus for £235 million   - 2010 November  >>  Carphone Warehouse ready to dismantle retail empire
• Canada's pension funds invest in UK infrastructure     - 2010
• Tesco raises £950 million thru Sale-Leaseback of 41 stores
• £2 bln worth of Shopping Centres on the market now

New entry to 'Wealthiest Female in Britain'

The highest new female entry is Chinese businesswoman Xiuli Hawken, 48, who made her fortune converting underground military shelters in China into underground shopping malls. She lives in London.  --  2011  TELEGRAPH      

• Chinese Investors snap up London Homes
• Asian investors dominate Central London buying
• Overseas buyers targeting high-end residential
• Asian investors largest buyers of new homes in Central London
• UK Wants Chinese Investors
• Wealthy Indians flocking to the UK
• Asians Buying London Properties

The United Kingdom rolls out the welcome mat for Chinese investments, in particular in the creative industry    >> MORE

Super-rich Chinese - London's next big act
Wealth banks look to Chinese who are outspending Arabs

(LONDON) The fear that established clients will flee rising UK taxes might be giving London's private bankers sleepless nights, but a Chinese remedy is at hand, in the shape of a growing colony of super-rich clients from Asia.

Signs from high-end jewellers, real estate brokers and law firms are signalling the arrival of the Chinese ultra-wealthy in London, following in the footsteps of older billionaire enclaves from Russia, India and the Middle East.

'The Chinese haven't arrived in London en masse yet, but they're going to be the next big act in town,' said James Fleming, a private banker at Coutts, the wealth management arm of Royal Bank of Scotland.

China's population of wealthy, defined as having more than US$1 million in investible assets, surpassed that of the UK in 2008, according to a survey by Merrill Lynch, and it now ranks fourth in the world.

In Asia, the number of ultra rich, with at least US$30 million, stands at 14,300, compared with 18,000 in Europe.

Signs that London retains its allure to the world's super wealthy will come as a relief to a British private banking industry made increasingly nervous by the threats from high earners to leave in large numbers.

A recent poll conducted by law firm Withers of 151 high net worth individuals and their advisers found 64 per cent of rich UK residents are considering leaving, with Switzerland, Hong Kong and Monaco cited as likely destinations.

But traders on London's Bond Street, a shopping strip of exclusive jewellers, art dealers and fashion retailers that bisects the elite Mayfair district report Chinese shoppers now outspend their Russian and Arab counterparts.

Chinese shoppers spent more than £3 million (S$6.8 million) on Bond Street during the six months to September, more than double the previous period, according to figures from the Bond Street Association of traders on the street.

London's upmarket estate agents also report a surge in interest from Asian, particularly Chinese, buyers of properties in the prime districts of Mayfair and Belgravia, where little sells for less than £1 million.

'Besides the Middle East, we are still seeing interest from Russia, and more and more from China,' said Jonathan Hewlett, who works at upmarket property consultant Savills.

Immigration lawyers servicing rich visa applicants also report growing demand, with no noticeable drop in enquiries since the government revealed plans to hike tax rates.

Samar Shams, an associate specialising in immigration at lawyer Lewis Silkin, said enquiries into the expensive Tier 1 Investor category visa were accelerating.

To qualify, a prospective migrant must have funds of at least £1 million, and once accepted must invest at least £750,000 in government debt, shares in UK companies or UK corporate bonds.

'The volume of applications has gone up pretty significantly in the last couple of years,' she said.

Despite reports that planned tax increases would lead to an exodus among Britain's wealthy, people working in the wealth industry say London remains an attractive tax haven, and enough of its non-domiciled residents may stay.

Global income and capital gains of a non-domiciled resident are not currently taxable in the UK unless remitted, and plans to levy a yearly £30,000 charge on overseas income after seven years will for many of them cause no serious pain.

'For the super wealthy, for whom such a charge remains proportionately low, the UK still provides tax haven status for those with major income and gains overseas,' said David Poole, head of Citigroup's private bank in the UK.   -   2009 December 9    REUTERS | BUSINESS TIMES

The world's most expensive home for sale

It is now not among Europe's top three most expensive office locations

The City of London has been knocked out of Europe's top three most expensive office locations by Geneva and Paris, research by property consultants NB Real Estate and ONCOR International showed yesterday.

Flagging: City of London rents are now 157 euros cheaper per square metre than in the Triangle d'Or area of Paris, which is often compared with London's Mayfair district

Average office rents in the City business district - Britain's historic financial heartland - have fallen 38 per cent in the last 12 months to 593 euros (S$1159.30) per square metre, making it Europe's sixth-most expensive office district.

City of London rents are now 157 euros cheaper per square metre than in the Triangle d'Or area of Paris, the neo-classical neighbourhood between the Champs-Elysees and the River Seine, which is often compared with London's Mayfair district.

The West End of London remains the most expensive office district in Europe despite experiencing the largest fall in office rents in the past year, with 45 per cent wiped off its office rental values to 961 euros per square metre.

Office rents in Moscow and Geneva, Europe's second and fourth-most expensive business locations, are now 873.3 euros and 623.1 euros per square metre respectively. Dublin takes fifth spot, with average rents of 600 euros per square metre.

Geneva and Zurich saw the biggest growth in rents in the last 12 months, the report said.

Geneva has seen a 14.6 per cent increase in the rental cost of office space and Zurich a 5.5 per cent increase in rents.

'Swiss banks may have taken the axe to their London-based investment banking operations but as a whole their private banking sector has held up relatively well,' said James Crisp, director at NB Real Estate.

'Whilst the City of London and the West End now have a substantial overhang of spare office space, that does not seem to be the case in the major Swiss cities,' he added.

Less than half the 16 European office locations covered by the report posted growth in rents in the past year, the weakest overall performance since 2004.

With the exception of London, Moscow office rents suffered the largest fall in Europe in the last 12 months, dropping 15 per cent on average.

'Rents for prime offices in Moscow are still among the most expensive in Europe - how well Russia deals with its latest economic crisis will determine whether it stays in that position,' Mr Crisp said. 'Depreciation of the rouble suggests rents have further to fall,' he said. -- 2009 April 22    Reuters

In London, the party's over and the hangover is setting in
Since the rug was pulled out from under the financial world, Britain's capital has taken one of the farthest and hardest falls of all

An economics student could get a crash course on the financial disaster by walking through Canary Wharf, the greatest concentration of banks, securities dealers and asset managers beyond Manhattan.

The ultramodern towers in East London, conceived some 20 years ago by Canadian developer Paul Reichmann, still shine on the banks of the Thames. But the exterior glow masks interior rot.

The heart of Britain's tallest building, One Canada Square, is no longer the international bolt hole of Bear Stearns and its 1,370 employees. The Wall Street firm collapsed last spring. A short stroll takes you to the defunct London offices of Lehman Bros., which had covered one million square feet before the firm went bankrupt in September. Citibank, propped up by endless U.S. government bailout loans, is still a Canary Wharf tenant, but a vastly diminished one as it eliminates tens of thousand of employees around the world.

There are no official figures, and the best anyone can come up with is a running tally done by the financial website Here Is The City. The figure is shocking: Between August, 2007, and February, 2009, 133,000 jobs were lost in investment banking, private banking and asset management. Topping the list of woe is Bank of America, the new owner of Merrill Lynch, with 29,260 jobs vaporized at the two companies.

As the downturn in the global financial services industry becomes dire, the futures of other big Canary Wharf names - Barclays, Morgan Stanley, Credit Suisse, HSBC – at Europe's premier office development remain uncertain.

London partied like no other city in Europe during the boom years, which began in the mid-1990s and was driven by the massive influx of investment capital and jobs into the investment banking, asset management, underwriting, private equity and derivatives markets.

By extension, business services soared. Throw in one of the hottest real estate markets on the planet and you had a recipe for extraordinary growth.

Now, London is falling as quickly as it rose. And there is little doubt things will get worse before they get better, for London is the victim of the bursting of a rare double-bubble: real estate and financial services.

The recession is still deepening, and some of its effects have yet to be felt. As the City - as London's financial centre is known - contracts, spinoff jobs are in jeopardy too. But businesses such as restaurants and fashion stores often try to tough it out for months, maybe a year or longer, before giving up.

Greg Harper, the operations manager of Centanni, the upscale men's clothing shop in Canary Wharf's Jubilee Place mall, waited three years to tap into one of the greatest concentrations of wealthy buyers on the planet.

Bad timing: The store opened a month before Lehman's eradication. "The top earners don't want to go back into the office with a new suit in a bag when the guy in the next off was just made redundant," Mr. Harper said. "So they buy after work. Or they don't buy."

The news isn't entirely grim. Indeed, the first signs of London's potential resurrection are already visible.

Nomura has commandeered the old Lehman space. Not far to the east, an entirely new metropolis – Stratford City – is under construction next to the 2012 London summer Olympics site. Driven by discounting and reduction in the value-added tax (akin to Canada's GST), retail sales in London rose 6.5 per cent in January, compared with 1.8 per cent nationally, and the weaker pound is keeping the tourist armies on the march.

"The speed of the downturn has been brutal," said Gilles Moec, the European economist in London for Bank of America Merrill Lynch. "But I don't believe in the depression scenario."

Not business as usual

Everyone in financial services knows someone who has lost a job. Many of the freshly fired simply vanished from London because they were foreigners, and couldn't afford to live in one of the world's most expensive cities without lavish incomes. "The financial crisis is as deep as we've ever seen," said Robert Wigley, 48, who was chairman of Merrill Lynch Europe until February. "Lots of my friends were made redundant. It was dreadful."

The job loss figure of 133,000 tallied by Here Is The City does not include spinoff jobs in everything from law firms and ad agencies to accountancies and print shops. Again, there is no official figure, but you have to assume these industries have entered the house of pain too. That's because business services, which account for a hefty 25 per cent of the London economy, are "very dependent" on the 8 per cent of the economy that is directly linked to financial services, said Mayor Boris Johnson's economic director, Anthony Browne.

Tony Travers, the London School of Economics professor who is the director of the Greater London Group, which researches the city's competitiveness, said London is vulnerable because it is essentially a business services centre. A recent report he co-authored noted that London's consumer services employment has yet to return to 1970s levels, while manufacturing employment is down 80 per cent from 40 years ago.

The economic driver has been business services. With this key sector under pressure, the report said "a sharp downturn in the London economy as well as the national economy" is likely in the next year.

You don't have to look hard to find evidence of the street-level job losses in Canary Wharf.

A restaurant near the City called Little Bay introduced a pay-what-you-want offer for hard-pressed customers (surprisingly, the average amount earned per meal went up). The doors of Citybunker, a sports bar in Canary Wharf, were padlocked earlier this month because of unpaid rent. The owners of Canary Wharf's numerous health studios and fitness centres fear they will have to close because of lack of credit and fleeing customers. Mr. Harper, of the Centanni shop, is still running his half-price Christmas sales on men's suits.

British Airways killed flights between Dublin, another bombed out financial centre, and the City of London airport near Canary Wharf because of the drop-off in demand. Rents and property values are sinking as fast as Prime Minister Gordon Brown's popularity ratings.

The gathering storm

Until the global financial system cratered last autumn, London had a lot going for it. Perched halfway between America and Asia, it could work many time zones without losing too much sleep. It operated in English, the lingua franca of the international business world. It had superb flight connections and decent high-speed rail links to the continent. Taxes for foreigners working in Britain, but legally not "domiciled" there (known as non-doms), were exceedingly low, in effect making London the world's biggest tax haven.

Regulation of financial services was not onerous; Britain lacked a clone of the U.S. Sarbanes-Oxley corporate cleanup legislation. Underwriters urged companies to list in the lightly regulated London markets. Competition between the (new) Canary Wharf and the (old) City resulted in a construction extravaganza in both areas that gave foreign companies ample choice when locating offices. Mr. Moec, the economist, said he "could feel the whole town vibrate" with energy when he arrived at the apex of the mad-money days in 2006.

A year later, Britain's Northern Rock mortgage bank became a ward of Her Majesty's Government.

In retrospect the spending and lending sprees were out of control, "an extraordinary bubble," in the words of Guy Hands, the founder and chairman of Terra Firma Capital Partners.  In a recent letter to shareholders, he described how the bubble was created. “In the U.K., regulators and shareholders acquiesced while six major banks increased their aggregate reliance on wholesale, unsecured funding from £38-billion [$68-billion] in 2003 to £498-billion in 2008 in order to finance increasingly speculative lending."

Looking ahead

British newspapers and TV serve up a daily smorgasbord of grim economic news, from the cost to the taxpayer of the nationalized banks and their handsomely paid-off executives to this week's story that the number of British unemployed could rise to 3.3 million from two million by the end of next year.

Yet optimism about London's future has not been entirely snuffed out. London has seen worse, say the believers, and has an endless ability to find new ways to revive is economy. American-style labour mobility, a legacy from the Thatcher era, will help London readjust.

Take the London docks. For much of the 20th century, they were the biggest docks in the world. By 1980 they had ceased to exist because they couldn't handle the new breed of monster-sized container ships.

Today, the Docklands, as they are called, are home to Canary Wharf, the Olympics site and the fastest-growing residential and light-commercial areas of the entire city.

To be sure, the demise of financial services could reduce London to a tourist trap, with a few education and technology bits floating on the edges. But while it's certain that financial services will shrink - the structured finance and derivatives businesses are fading already - there is no suggestion that the industry itself is doomed, taking London down with it.

"We really need banks," said Mr. Travers of the London School of Economics. "If we didn't, why are they all being bailed out?"

Mr. Wigley, the former Merrill Lynch Europe chairman, recently headed a review of London's competitiveness for the mayor's office, and shares a similar view. "There's nothing really to reinvent," he said. "Financial services are so massive and essential that we need to rebuild them."

He has a caveat: New financial regulation could work against London's effort to retain its status as the world's premier international financial services centre. Some of the regulators and finance ministers of the Group of 20 industrialized countries, notably Germany, France and - yes - Britain are pushing hard for tough, transborder regulations aimed at preventing a repeat credit crisis. Pan-European Union regulation would give banks one less reason to pick London over, say, Frankfurt or Paris.

To improve London's chances of staying on top of the financial services heap, Mr. Browne, the economics director, said London is setting up a financial services board to promote the city overseas.

Sterling's plunge can only make Mr. Browne's effort easier. For the first time in seven years, London is less expensive than New York.

"Big Macs are cheaper here than in the United States," he said.

Build, and they will come

London is not relying entirely on the uncertain financial services revival to lift it out of the hole. It has a backup plan. In this perennially real-estate-mad city, the plan hinges on a huge property project just to the east of Canary Wharf called Stratford City, which is being developed by Australia's Westfield Group.

Legend has it that Kensington, Chelsea and other posh London neighbourhoods sprung up west of the centre to escape the foul smells emanating from the tanneries and factories downwind in the docks area.

The German bombs of the Second World War and postwar deindustrialization turned East London into something of a wasteland, but one with huge development potential because of the vast amounts of cheap land close to the heart of one of the world's biggest cities.

"London is moving east in terms of growth," said Westfield's John Burton, director of the Stratford City project. "The opportunity here is phenomenal. Seventy per cent of all of London's population growth in the next 15 years will be in East London."

The 87-hectare site will in effect anchor a whole new metropolis in East London, one that will include Canary Wharf, the Olympics site and a new rail station for high-speed trains to continental Europe. Despite the recession, Stratford City is not being scaled back, no anchor retail tenant has pulled out and the opening date - 2011, one year before the London Olympics - remains fixed.

But even Mr. Browne, a former journalist, knows it's wise to hedge his bets. To predict that London will return to its normal frenetic, easy-money, champagne-swilling state next year or even the year after is wishful thinking at this stage.

"We worry about how deep [the recession] will get," Mr. Browne said. "We're in a journey to the unknown."   - 2009 March 20   GLOBE & MAIL

London Lowdown

In a sign of the distressed selling going on in the London property market, New Star UK Property Unit Trust has sold its Governors House office building for a hefty loss.

Just two years ago New Star, a London-based property fund, bought the building for £124 million, or about $175 million. Now, New Star is selling to a fund run by GLL Real Estate Partners for £70 million, according to people close to the deal. The sale price represents an initial return on investment of 7.4%, a bargain compared to yields near 4% at the peak of the boom. The building houses the European headquarters of life-insurance group Prudential PLC. The building got its name because it was built on the ruins of a Roman governor's mansion.

GLL, a Munich-based real-estate fund management group with more than £3 billion, or $3.88 billion, in assets under management, paid cash for Governors House and is in talks with banks about putting debt on the building. GLL, which was advised on the transaction by Cushman & Wakefield, wasn't immediately available for comment.

New Star, which has some £801.78 million in assets and will be acquired by Henderson Global Investors next month, had no comment.   - 2009 March 17   WALL ST JOURNAL

The number of cranes adorning the London skyline has fallen by a fifth in just six months as the financial downturn chokes off corporate demand for newly built office space.

Developments under way have fallen by more than half in a year, from 46 in the third quarter last year to just 17 in the past three months. But a report on Thursday warns that London is still facing a huge oversupply of empty office space in the next few years

Despite the slowdown in new starts this year, more than 12m sq ft of office space is still under construction, according to the Crane Survey from property consultancy Drivers Jonas out next week, equivalent to about 25 new blocks the size of Swiss Re's "Gherkin" tower in the City of London.

There is already about 15m sq ft of office space lying empty in central London, and vacancy rates in parts of the capital such as the City are set to rocket as banks and other financial institutions look to reduce staff and freeze relocation plans.

In the Square Mile alone there is 5.6m sq ft of space under construction without a waiting tenant, and the majority of this will be completed in 2009. The larger speculative schemes include Minerva's Walbrook development, the Heron tower in Bishopsgate and British Land's Ropemaker Place.

The impact of the global credit crisis on the financial services sector means rents in the City of London are already tumbling - they have fallen to about £57 per sq ft from a peak of £65 per sq ft last summer.

Given the additional problem of an increase in so-called grey space - where banks and other occupiers attempt quietly to sublet their own properties as staff numbers fall - some agents predict rents could slip nearer £40 per sq ft before the end of the economic downturn.

Drivers Jonas said it did not expect any significant new starts "for some time" in the City. The report also warns that other markets across London will not escape the downturn as economic conditions and the fallout from the financial crisis weighs on take-up of office space during the next 12 to 18 months.

The West End is the only area to record an increase in new starts, up from six to nine in the past six months. While at less risk of overdevelopment, the report warns Mayfair’s reliance on hedge funds means rents will fall from record levels as this source of demand dries up. Other markets such as Canary Wharf, the Southbank and King's Cross have seen no new commercial building in the past six months. Canary Wharf, however, could still be "caught out by its Achilles' heel - a heavy reliance on the American financial sector", according to the report.

"The demise of two of its key tenants, Bear Stearns and Lehmans, could put a huge amount of top quality space on to the market," it warns.

Anthony Duggan, partner at Drivers Jonas, said: "The short-term outlook is one of oversupply with a consider-able volume of speculative space being delivered into the market over the next 15 to 18 months at a time of weak demand. However, the report clearly shows that new development starts in London have come to a grinding halt."

The report says is developers are walking away from new projects, indicating they have a more realistic grasp of the level of demand in a downturn.  - 2008 November 5   FINANCIAL TIMES

Commercial-property companies in the United Kingdom are selling assets and putting developments on hold as credit is virtually unobtainable and layoffs across the financial sector and related industries are curtailing demand.

Two of the country's biggest commercial developers and landlords, Land Securities PLC and British Land PLC, have between them offloaded almost £5 billion ($8.68 billion) in assets during the last fiscal year. And they aren't alone.

U.K.'s real-estate giants have been selling properties to reduce debt and position themselves for further market declines. New commercial-property developments - once constructed with confidence in a quick lease - are also rare as businesses fail to secure financing.

"Headlines will be negative for some months to come," said British Land's departing chief executive, Stephen Hester.

Industry specialists warned that after 2010, developers will break ground on only a handful of major developments, because even if the funding environment improves in 2009, finance for speculative developments will remain hard to obtain. Speculative development swells when commercial real-estate markets are booming -- and declines offer a gauge of market health.

London-based real-estate investment consultants at Jones Lang LaSalle predict that speculative office space delivered to the market will fall to about 2.66 million square feet in 2009 from around three million square feet in 2008. By 2010, the amount delivered will shrink nearly 50% to 1.52 million square feet. By the end of 2009, Land Securities' London developments will total a tenth of those completed during 2007, according to the firm.

Docklands | Canary Wharf

British Land, which last quarter sold its Willis Building for £400 million, among other sales, also announced cutbacks in development going forward as job losses in the City of London are no longer restricted to the banking sector but include lawyers and other professionals.

Jobs cuts are boosting vacancy rates and shrinking rents throughout London. London rents have fallen 15% in the City and the West End since 2007 as vacancies force landlords to increase incentives for tenants. Only 1.9 million square feet was leased across London in 100 deals in the third quarter, the lowest level since 2004.

Analysts predict rents will fall an additional 10%, reaching as low as £40 to £45 a square foot during the next 12 to 18 months. This will further curtail supply of property in the short term as it will discourage developers from breaking ground on projects.

Vacancy rates are soaring -- they have risen to 8.8% from 4.2% in 2007. But landlords hope that with few new projects in the works, vacancy rates will fall to about 8% in 2010 or so, driving rents up and expanding yields for commercial-property companies.

"It is important to remember that we are in the down part of a cycle and the actions being taken in these gloomy times ... will in fact sow the seeds of recovery," Mr. Hester said.    - 2008 October 15    WALL ST JOURNAL

Multiple Economic Troubles

The U.K. economy may be slowing even more rapidly than expected, with retail sales growing at their slowest pace in at least 25 years and house prices falling more sharply than at any time since 1990.

Tumbling house prices, slowing wages growth and widespread concerns about job security are taking their toll on consumer spending, the driving force behind the 16-year run of economic growth that ended in the second quarter.

The weak outlook for consumer demand suggests that the Bank of England has few reasons to fear a second round of price increases in response to the earlier surge in oil and food prices, which are now falling. Many economists now expect the central bank to cut its key interest rate before the end of this year.

The Confederation of British Industry said Thursday that its main indicator of retail sales volume plunged in August to its weakest level in a quarter century, as poor weather exacerbated the impact of the credit crunch, higher inflation and weak consumer confidence.

According to the business lobby group's Distributive Trades Survey, 60% of respondents said sales in the first half of August were lower than a year ago and 13% said they were up. That dragged the sales volume balance to negative 46 from negative 36 in July, the lowest level since the survey began in 1983.

Sales are unlikely to pick up soon, although consumer confidence did improve slightly in August. Polling organization GfK NOP said the headline measure of sentiment was negative 36 compared with negative 39 in July, an unexpected increase.

That is likely to prove a short-lived bounce, boosted by the U.K.'s largest Olympics-medals haul since 1908.

"This improvement could be down to a number of recent factors, which are mostly of short-term influence, such as cheaper petrol offers, summer holidays happening or just a general feeling of 'things can't get any worse, can they?'" said Rachael Joy, from GfK NOP's consumer confidence team.

The Nationwide Building Society said the price of a typical house fell 1.9% from July and 10.5% from the August a year earlier, marking the biggest annual decline since the fourth quarter of 1990.

Fionnuala Earley, Nationwide's chief economist, said that although she expects the Bank of England to reduce interest rates, it would have little impact on the mortgage and housing markets as long as confidence in the economy remains weak.

A poll commissioned by the Trade Union Congress -- which represents U.K. labor unions -- showed that 13% of the work force, aren't confident they will still be in their job in a year.  - 2008 August 29   WALL ST. JOURNAL

London named top literary destination

London has been named as the world's top destination for tourists looking for a taste of literature, beating Paris, New York and Rome in a top 10 compiled by a travel website.

The birthplace of writers such as Charles Dickens and John Keats and the setting for countless novels, London was described as 'the home of literature we have spent so much time learning and loving'.

In second place was Straford-upon-Avon, the picturesque Warwickshire birthplace of Shakespeare and home to the Royal Shakespeare Company.

Edinburgh came third thanks to its mix of historic and contemporary writers. It was home to Sherlock Holmes creator Arthur Conan Doyle, Treasure Island creator Robert Louis Stevenson and Walter Scott, who wrote Ivanhoe.

Authors Ian Rankin, Alexander McCall Smith and Harry Potter creator JK Rowling are all based in the city.

'Bookworms will enjoy delving into these destinations,' said TripAdvisor spokeswoman Michele Perry.  - 2008 August 15   REUTERS

Westfield bullish on London malls

Despite the U.K.'s sluggish economy and a looming recession, the Westfield Group is taking an optimistic view of London retail. Westfield London, a 1.6 million-square-foot center in west London slated to open on Oct. 30, is already 96 percent let, while a  1.9-million-square-foot center next to the Olympic Park in east London's long-rundown Stratford area is slated for completion in 2011.  - Bloomberg    September 2, 2008

UK property brokers fear bank-style jobs cull  
Rumours that big players plan 5,000 redundancies as demand tanks, but some analysts dispute that figure

With much of the European real estate market on its knees, the painful death of job security is now haunting property brokers as well as investment bankers.

High-flying real estate dealers are leaving their favourite tables at expensive London restaurants vacant, awaiting a purge that will have much in common with the one that has rocked Britain's banking sector this year.

Property booms fed and were fed by the global credit boom that ended abruptly last year when US mortgage defaults began to mount, and investment demand in the UK and US property markets has crumbled in the credit crunch that followed. Now other European markets are wilting fast and job losses may not be confined to those frontline bear markets.

'Property is a cyclical business and contraction will be inevitable as firms look to be more streamlined,' warned British Property Federation chief executive Liz Peace.

Rumours abound that some of the biggest employers in real estate are bracing for a phase of redundancies which could cost up to 5,000 property professionals their jobs across their European, Middle Eastern and African (EMEA) operations.

Not everyone agrees headcounts are under such strain.

'Markets like Eastern Europe, Russia, Ukraine, Turkey are still growing, so it would be ludicrous to downsize European businesses anywhere near that figure,' said Paul Bacon at property consultant Cushman & Wakefield, referring to the rumours of 5,000 job losses.

'We have absolutely no plans for wholesale redundancies in the UK,' said Mr Bacon, who is head of EMEA business.

Major emerging markets have so far escaped the worst of the credit crunch. However, the credit boom that preceded it fed foreign investors' appetite for property as well as other assets in emerging markets.

'There are a number of markets where (property) prices have risen very quickly,' said Robert Maciejko, managing director for Central and Eastern Europe at global management consultancy Oliver Wyman. 'The issue is when the Brits or the other foreign investors are no longer investing, or even looking to sell, and that's when prices can really go down.'

According to data from Cushman & Wakefield, European property trading volumes have slumped 63 per cent year-on-year to 25.6 billion euros (S$54.7 billion), leaving many brokers in Spain, Ireland, Germany and France fearing redundancy.

One market analyst, who did not wish to be named, said a flurry of corporate takeovers executed in the twilight of the property cycle had left titans like CB Richard Ellis (CBRE) and Jones Lang LaSalle 'thick around the middle' - with too many support staff playing piggy-back on fewer high fee-earning brokers.

'We have grown market share considerably in recent years, partly due to organic growth and partly through acquisitions,' said Alastair Hughes, head of EMEA at Jones Lang LaSalle (JLL). 'These acquisitions were either to expand our geographic coverage or to strengthen existing business areas. None were predicated on a continued capital markets boom.'

Figures posted last week showed sinking second-quarter profits at both firms but overall revenues in JLL's EMEA division were 20 per cent higher than the corresponding period in 2007 as the firm racked up lower- margin advisory business to offset an abrupt halt in building sales.

'Property services firms are all having to adapt to more difficult market conditions,' said Mr Hughes, who described the rumoured threat of 5,000 job cuts as excessive. 'The industry will have to manage costs accordingly because it is unlikely that the capital markets will recover in 2009, and likely that the leasing markets will continue to soften.'

London-listed global consultancy Savills told Reuters it had embarked on a cost-cutting programme that included some redundancies but it would not discuss details.

Mr Bacon said Cushman was still keen to make strategic appointments. 'Our European business has expanded rapidly in the last five years but the quid pro quo was we couldn't grow as fast in the UK. This gives us a chance to address that,' he said.

CBRE, the world's largest property consultancy, said it was 'naturally focused' on cost cuts that would provide 'meaningful bottom-line benefit' and that it had shed a modest number of jobs in business areas hardest hit by the market downswing.

Paul Soothill, head of property and facilities management recruitment at Joslin Rowe, said property firms hoped to redeploy staff to areas like outsourcing, which can help UK corporates to manage their real estate more cost-effectively.

Average UK commercial property values have tanked by almost a fifth since the collapse of Britain's white-hot commercial property market in June 2007.

In the same way Britain starts sniffling when the United States catches a cold, where the UK real estate market goes, many European property markets tend to follow.

'Many of the big firms have been here before,' said the British Property Federation's Ms Peace. They 'know what they need to do to weather the storm'.     - 2008 August 7  REUTERS

London's super-rich
Where do the millions go?

It is rarely a bad time to be rich, but now is better than most, especially in London. Over the past few years the city has become a magnet for the global plutocracy, attracted by lavish nightlife, luxuries of all sorts, easy access to the rest of the world and, most of all, a comparatively benevolent taxman. Russian oligarchs mix with American tycoons and Middle Eastern oil magnates in what Forbes magazine, bible of the global super-rich, described last year as "a magnet for the world's billionaires".

But a study published on November 5th suggests that not all the news is good. According to Stonehage, a firm of financial advisers to London's multi-millionaires, it is costing the capital's many plutocrats much more to maintain their standard of living than it used to. They reckon that prices of luxury goods and services increased by 6% in the 12 months to July, more than twice the 2.3% rise registered on the official consumer-price index .

Existing government inflation measures do not quite capture the upper-crust experience, Stonehage says. The CPI, for example, ignores many housing costs that rich and poor alike must pay, and the more comprehensive retail-price index excludes the richest 4% of consumers. Stonehage's new Affluent London Living Index is designed to fill the gap.

The details are enough to make an investment banker splutter into his increasingly expensive caviar (the price of which rose 28% over the year). Rents in central London have increased by 25% since 2002. A top-line Range Rover today costs 20% more than last year's model. Fees for day pupils at Westminster (a fancy independent school) are up by 7%, and the price of a case of Lafite Rothschild by an eye-watering 117%. Leisure has grown pricier as well: two days of grouse shooting costs 8% more this season than last and an executive box at Chelsea Football Club, London's most fashionable, has risen by 25%. Robby Hilkowitz, a director of Stonehage, blames a rapid increase in the ranks of the mega-rich for pushing up prices.

Exceptions there are: cars may be getting pricier but chauffeurs are no dearer than they were. Nor are fancy haircuts or membership of gentlemen's clubs. Entry-level private jets are actually 7% cheaper, although high oil prices could make the fuel bills painful. Breast implants for the high-earning woman are down 10%.

Yet rising consumption costs tell only half the tale. Most of the ultra-rich have the bulk of their wealth invested, so they have benefited handsomely from the sustained boom in asset prices. The same central London house that costs 25% more to rent is worth 150% more on the market. And sympathy for the plutocrats' plight may be hard to find among the great hordes of the salaried unwashed (many of whom also live in London), whose real disposable incomes are being squeezed. - 2007 November 8   ECONOMIST

(LONDON) Investment in European commercial real estate is expected to jump 20 to 25 per cent in second half of 2005, after rising 4 per cent to 47.9 billion euros (S$97.7 billion) in the first half of 2005 over the same period of 2004, a survey showed.

'European direct real estate continues to perform well relative to other mainstream investment assets; strong risk-adjusted performance and positive yield gaps have encouraged investors throughout Europe,' , chief executive of European capital markets at property consultants Jones Lang LaSalle, said on Tuesday.

'We expect investment volumes in the second half of 2005 to reflect the same 20 per cent to 25 per cent uplift on the first half of the year that was recorded in 2004. This will drive total volumes for 2005 to well over 100 billion euros.'

European cross-border real estate investment totalled 24 billion euros in the first half of 2005, or about 50 per cent of total activity, and was 27 per cent higher than in the same period of last year.

The greatest gains in cross-border investment market share have been seen in Sweden and Central and Eastern Europe since 2000. 'In the past 18 months we have begun to see an increase in the volume of sales by cross-border investors seeking to take advantage of recent yield compression, the opportunity to crystallise profits,'  head of European research at Jones Lang LaSalle said.

Property yields (rent as a proportion of capital value) move in the opposite direction to prices, and have been falling across Europe as a wall of investment money seeks out strong real estate returns. - Reuters    11 Apr 2005

• Asia's Sincere Group (Ma Family) in London properties
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• Home price rise "to slow down in 2003'
• Chartered Surveyor's Market Forecasts
• Asia's Sincere Group (Ma Family) active in London properties
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• Property Bubble Does not Bother The Rich
• Economist : London's Olympic spirit
• Kate Moss as tenant
• Scottish castle for free - sort of
• Residential picking up
• Luxury Residential
• Docklands | Canary Wharf
• St. James Financial District
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• Home prices - Will they Fall?
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• Chartered Surveyor's Market Forecasts
• London properties
• London Property Snapshot 2000

UK house prices, which have tripled in the past decade, are already showing signs of falling. Values dropped for a second month in October, the first back-to-back decline since May 2005, mortgage lender HBOS Plc said last week.

Higher prices have made it harder for investors to profit from letting out their properties.

Rental yields on houses and apartments are now about 5 per cent, says Citigroup, which compares with the 6.37 per cent average rate offered by lenders this month on a two-year mortgage for 95 per cent of the property price. -   2007 November 13    Bloomberg

RESIDENTIAL

Centrally located properties in London continue to be in high demand though  with Asian investors concentrating acquistion of new properties during the past seven years.  Britons, on the other hand pre prefer period properties, particularly Victorian and Georgian. 

House prices are set to rise by more than 20% a year, City analysts suggested at the weekend. A leading investment bank believes a leap in London house prices this summer will trigger similar increases across the country.

A surge in demand for London properties and a lack of homes for sale will push prices in the capital sharply higher, according to Danny Gabay, UK economist for JP Morgan. This will fuel house price inflation nationally, he said.

Until recently the London property market has acted as a brake on the rapid rise in house prices elsewhere. Over the past year, the cost of homes in London has barely increased. Demand in the capital was hit by the September 11 terrorist attacks and the knock-on slide in the stock market.

But the latest survey from the Royal Institute of Chartered Surveyors reveals a sudden jump in inquiries from househunters. Its measure of estate agents reporting a rise in buyers rose from just 3% in April last year to 40% this April.

Gabay believes a steep increase in demand for London homes will send property values soaring in the capital. 'There is too much money chasing to few homes,' he said. 'No supply and a surge in demand is a lethal cocktail for inflation.'

The warning comes as house prices rose by 4.2% in May, the biggest monthly rise since records began in 1983. The previous high was 4.1% in July 1988, just weeks before the market went bust.

According to figures from the Halifax this month, the average cost of a home rose from £102,808 to £107,152 in just four weeks. The leap takes annual house price inflation to 18.5%.

Some observers fear the property market could be heading for another spectacular collapse. The latest figures are good news for homeowners but will add to the gloom of first-time buyers. They also mean it will be even harder for key workers such as nurses and firefighters to afford homes in London and the South East.

Meanwhile, as the property market soars an investigation has been ordered into dubious practices among estate agents. The inquiry, into profiteering and corruption, will be conducted by the Office of Fair Trading. Prompted by a record number of complaints, the investigation is likely to examine gazumping, a legal but widely despised ruse in which a house seller in a rising market increases the asking price after acquiring a buyer. Estate agents usually act as middle men in gazumping and profit from the higher prices. - by James Orr        Daily Mail       10 June 2002

Singaporean viewpoint on London Real Estate

Singaporeans may find it more opportune to cash in on existing London properties than to buy one at this time, considering that the pound sterling has strengthened against the Sing dollar since early last year and capital values have rocketed in the past decade before last year's relatively slight fall.   The racing London property market is  definitely easing, according to the latest research by agents FPDSavills in the United Kingdom.

At 8.5 per cent, growth was rapid in the first quarter as buyers raced to beat the March budget announcement of an increase in stamp duty, and the rate eased back to 2 per cent for the second quarter, said Yolande Barnes, UK director of research for FPDSavills.

For the whole of this year, the January forecast of 13.5 per cent for prime residential still held, giving rises of just one per cent for each of the remaining quarters. And the future looks steady and stable.

"It would take an external economic shock to shake demand sufficiently to precipitate the forced sales and widespread reductions in values across the market," Ms Barnes said. While this could not be ruled out, economic indicators looked good and inflation was low. Most at risk of a sharp correction are properties in non-prime locations or on the fringes of "emerging" areas.

"We are seeing valuations falling, for example, where people cannot afford Islington and buy on the edge of Hackney instead, or they really want Hackney but settle for neighbouring Hoxton," Ms Barnes said.

"These fringe areas have been pushed up too far, too quickly."

As usual, prime locations hold up best in a slack market but London is huge and every area is driven by local factors.

For example, prices in Mayfair, always popular with international buyers, range from £600 (about HK$6,969) per square foot for a quality refurbishment, and £700 for a newly built apartment, increasing to £1,000 per square ft around Park Lane.

Not far away in newly trendy Marleybone High Street, a different dynamic is evident. Since the Jubilee Line extension made it an easy commute to Canary Wharf, bankers and financiers have moved in. You can buy at £450 to £550 per square ft within minutes of Baker Street tube station and, with the likelihood of big bonuses later this year for property and financial sectors in the square mile, this area could shoot up.

Over time London property has proved a good bet. Anyone who bought there eight years ago - and many Asian buyers did - will be happy. They are sitting on gains of 152 per cent. The best of those years was last year, where falling interest rates and improved market sentiment drove prime residential prices up 24 per cent, according to FPDSavills.

At the top end, Ms Barnes said, there had been a subtle shift in the amount of available supply. Since the frenetic activity had eased, "discretionary selling" - where owner-occupiers who do not have to sell test the water - was happening.

If they did not make a killing, they would simply take their place off the market. But if they did sell, they in turn would become buyers.

These had replaced the buy-to-let brigade of the last few years. Demand had fallen in the investment market.

"Reduced capital growth prospects and falling yields are discouraging new private investors," Ms Barnes said. "The effects of this are likely to be felt most strongly in the new development market where marketing strategies are focused on attracting investment buyers in the early stages of the sales process," she added. So look hard beyond the hype and haggle at those Hong Kong exhibitions of off-the-plan London developments.

"It has shifted from a buyer's to a seller's market," she added.

Hong Kong-based UK property sourcer and manager for SAR clients Chris Moscrop has just returned from London. He found sensibly priced property in prime locations was still selling well, but said anything second-rate or over-priced was sticking.

"But I do not see this pause as a problem; the market had to slow down some time before it went over the cliff," he said.

He expected any drop in interest rates would kick-start the market once more, but advised anyone who had not yet bought in London, and who felt they had missed the boat, to delay their purchase a bit. Be cool, be prepared to make offers and walk away if necessary, he advised.

The lull in sales was good news for existing Hong Kong investors in top-end London property, because rentals had improved. Returns had dwindled on houses to an average net yield of 3.8 per cent for the second quarter of this year - 6.8 per cent gross. Flats fared slightly better, returning 4.3 per cent net, equal to 7.1 per cent gross.

Having been static since 1998, rental yields have made a 6 per cent leap during the first half of this year alone.

FPDSavill's 11 per cent growth prediction for this year looks a little bullish, considering many London agents are actually advising their landlords to hold rents steady to keep good tenants, or attract new ones.

Nevertheless, FPDSavills said rents had bottomed out and would reach 4 per cent net in the fourth quarter.

None of this would deter Hong Kong investors, insisted Linda Robinson, executive director of international property for Colliers Jardine. They look at the combination of yields and capital growth, and know that if the sales market slackens, the rental market improves.

Asian buyers in search of a prestige property should look at SW1 addresses - Knightsbridge, Chelsea, and along the Embankment, Ms Robinson said. Predictable advice, since Colliers Jardine will unleash units in Nine Albert Embankment Road on to the SAR market, through an off-the-plan exhibition next month. Prices will be £195,000 to £1.5 million, and units range from 500 sq ft to 2,500 sq ft, in what used to be the old British Steel building.

Those flats overlooking the murky River Thames will command a premium. Waterfront property, always first choice for Hong Kong buyers, generally costs 25 per cent extra in London.   - by Anna Healy Fenton  South China Morning Post    Sunday, August 20, 2000

Property rush gathers pace

The London housing market is roaring toward one of its busiest weekends ever as a number of crucial market drivers coincide, fuelling the raging debate about whether the market is about to boil over.

The peak spring buying season, a flood of bonus money from a revived City, a new wave of wealthy foreign buyers, and a rush to lock in before further rises in interest rates have propelled demand toward record levels.

Despite recent analysts' forecasts of a potential 40% crash in prices, some estate agents say buyer numbers have risen fourfold from this time last year in a market with fewer houses for sale, and there are signs that prices are accelerating strongly.

Charles Peerless, Winkworth head of West End, Chelsea and Knightsbridge, said: 'The big difference is properties from £450,000 to £800,000, which are selling dramatically and weren't moving a year ago. We have examples of sealed bids and frustrated purchasers.'

House prices in the capital are thought to be about 9% higher than 12 months ago, more than making up for a setback during the first half of last year, and prompting concerns among some City forecasters that the market is about to overheat.

Winkworth says that house prices have risen 3.78% since the start of the year, the largest quarterly increase since January 2002, and there is little evidence that the Bank of England's recent increase in its base lending rate to 4% has deterred buyers. In fact, some are being encouraged into the market now, fearing that further rises in rates and pricier mortgages lie ahead.

James Bailey of Douglas & Gordon said: 'I have never known an Easter period like it. I even received three calls on my mobile on the Easter Sunday from sellers confirming that they wished to go ahead.'

Lane Fox director Lulu Egerton said: 'This year City bonuses are back and potential buyers have been sussing out the market since January on the back of their bonus prediction.'

Foreign buyers, led by an influx of Russian money, are also back in force, resurrecting last year's 'dead' market for multi-million pound homes, according to FPD Savills head of residential Rupert Sebag-Montefiore.

Super rich are the drivers

THIS month's record London house deal in which Indian billionaire and New Labour donor Lakshmi Mittal shelled out £70m for Formula One promoter Bernie Ecclestone's Kensington Palace Gardens mansion has had a galvanising effect at the highest levels of the capital's property scene.

With a £27m deal in Chelsea breaking the UK record for a flat this month, there has been an increase in the numbers of deep-pocketed buyers in the market. They include Russian, Irish and Asian interests and a new wave of City super-rich.

Agents report a pick-up in the number of hedge fund managers buying in the £7m-to-£15m range in Mayfair and Holland Park.  - By Mira Bar-Hillel,   Evening Standard     16 Apr 2004

TOWN	PRICE	CHANGE ON ONE YEAR
Hartlepool	£109,068	+59%
Darlington	£128,936	+58%
Swansea	£138,744	+55%
Blackburn	£101,409	+51%
Newark	£183,419	+48%
Stockton-on-Tees	£122,186	+44%
Pontefract	£133,356	+43%
Rotherham	£104,832	+41%
Chesterfield	£120,217	+40%
South Shields	£107,448	+40%
London	£239,552	+9.1%
UK	£147,785	+18.5%

This Is Money   16 Apr 2004

Fresh evidence that Britain's housing market is past its peak emerged today, although property prices in London are nudging up again following recent falls.

The latest report from Rightmove, Britain's biggest property website, shows the average asking price of a home rose by 2% in February - traditionally a busy month for house buying. But the annual rate of increase slipped from 26.5% in January to 23.5% because of a much bigger increase (4.5%) in February last year.

In London, asking prices rose 1.2% on average in February. Over the past four months, pricier central boroughs have enjoyed a strong recovery after suffering significant price falls in the autumn. Kensington and Chelsea prices have surged by 10.3%, while in the City of Westminster they are up 4%.

The report also suggests this month's interest rate cut has boosted sales activity. A record number visited Rightmove's site on the Monday after the reduction. Shipside said: 'Though the cut has not been fully matched by most of the main mortgage lenders, it may have given buyers more confidence that interest rates and mortgage repayments will remain low.'   -  By Jane Padgham    Evening Standard   26 Feb 2004

  source:  Propety Mall.com

Centrally located properties in London continue to be in high demand though  with Asian investors concentrating acquisition of new properties during the past seven years.  Britons, on the other hand pre prefer period properties, particularly Victorian and Georgian. 

House prices are set to rise by more than 20% a year, City analysts suggested at the weekend. A leading investment bank believes a leap in London house prices this summer will trigger similar increases across the country.

A surge in demand for London properties and a lack of homes for sale will push prices in the capital sharply higher, according to Danny Gabay, UK economist for JP Morgan. This will fuel house price inflation nationally, he said.

Until recently the London property market has acted as a brake on the rapid rise in house prices elsewhere. Over the past year, the cost of homes in London has barely increased. Demand in the capital was hit by the September 11 terrorist attacks and the knock-on slide in the stock market.

But the latest survey from the Royal Institute of Chartered Surveyors reveals a sudden jump in inquiries from househunters. Its measure of estate agents reporting a rise in buyers rose from just 3% in April last year to 40% this April.

Gabay believes a steep increase in demand for London homes will send property values soaring in the capital. 'There is too much money chasing to few homes,' he said. 'No supply and a surge in demand is a lethal cocktail for inflation.'

The warning comes as house prices rose by 4.2% in May, the biggest monthly rise since records began in 1983. The previous high was 4.1% in July 1988, just weeks before the market went bust.

According to figures from the Halifax this month, the average cost of a home rose from £102,808 to £107,152 in just four weeks. The leap takes annual house price inflation to 18.5%.

Some observers fear the property market could be heading for another spectacular collapse. The latest figures are good news for homeowners but will add to the gloom of first-time buyers. They also mean it will be even harder for key workers such as nurses and firefighters to afford homes in London and the South East.

Meanwhile, as the property market soars an investigation has been ordered into dubious practices among estate agents. The inquiry, into profiteering and corruption, will be conducted by the Office of Fair Trading. Prompted by a record number of complaints, the investigation is likely to examine gazumping, a legal but widely despised ruse in which a house seller in a rising market increases the asking price after acquiring a buyer. Estate agents usually act as middle men in gazumping and profit from the higher prices. - by James Orr        Daily Mail       10 June 2002

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The racing London property market is  definitely easing, according to the latest research by agents FPDSavills in the United Kingdom.

At 8.5 per cent, growth was rapid in the first quarter as buyers raced to beat the March budget announcement of an increase in stamp duty, and the rate eased back to 2 per cent for the second quarter, said Yolande Barnes, UK director of research for FPDSavills.

For the whole of this year, the January forecast of 13.5 per cent for prime residential still held, giving rises of just one per cent for each of the remaining quarters. And the future looks steady and stable.

"It would take an external economic shock to shake demand sufficiently to precipitate the forced sales and widespread reductions in values across the market," Ms Barnes said. While this could not be ruled out, economic indicators looked good and inflation was low. Most at risk of a sharp correction are properties in non-prime locations or on the fringes of "emerging" areas.

"We are seeing valuations falling, for example, where people cannot afford Islington and buy on the edge of Hackney instead, or they really want Hackney but settle for neighbouring Hoxton," Ms Barnes said.

"These fringe areas have been pushed up too far, too quickly."

As usual, prime locations hold up best in a slack market but London is huge and every area is driven by local factors.

For example, prices in Mayfair, always popular with international buyers, range from £600 (about HK$6,969) per square foot for a quality refurbishment, and £700 for a newly built apartment, increasing to £1,000 per square ft around Park Lane.

Not far away in newly trendy Marleybone High Street, a different dynamic is evident. Since the Jubilee Line extension made it an easy commute to Canary Wharf, bankers and financiers have moved in. You can buy at £450 to £550 per square ft within minutes of Baker Street tube station and, with the likelihood of big bonuses later this year for property and financial sectors in the square mile, this area could shoot up.

Over time London property has proved a good bet. Anyone who bought there eight years ago - and many Asian buyers did - will be happy. They are sitting on gains of 152 per cent. The best of those years was last year, where falling interest rates and improved market sentiment drove prime residential prices up 24 per cent, according to FPDSavills.

At the top end, Ms Barnes said, there had been a subtle shift in the amount of available supply. Since the frenetic activity had eased, "discretionary selling" - where owner-occupiers who do not have to sell test the water - was happening.

If they did not make a killing, they would simply take their place off the market. But if they did sell, they in turn would become buyers.

These had replaced the buy-to-let brigade of the last few years. Demand had fallen in the investment market.

"Reduced capital growth prospects and falling yields are discouraging new private investors," Ms Barnes said. "The effects of this are likely to be felt most strongly in the new development market where marketing strategies are focused on attracting investment buyers in the early stages of the sales process," she added. So look hard beyond the hype and haggle at those Hong Kong exhibitions of off-the-plan London developments.

"It has shifted from a buyer's to a seller's market," she added.

Hong Kong-based UK property sourcer and manager for SAR clients Chris Moscrop has just returned from London. He found sensibly priced property in prime locations was still selling well, but said anything second-rate or over-priced was sticking.

"But I do not see this pause as a problem; the market had to slow down some time before it went over the cliff," he said.

He expected any drop in interest rates would kick-start the market once more, but advised anyone who had not yet bought in London, and who felt they had missed the boat, to delay their purchase a bit. Be cool, be prepared to make offers and walk away if necessary, he advised.

The lull in sales was good news for existing Hong Kong investors in top-end London property, because rentals had improved. Returns had dwindled on houses to an average net yield of 3.8 per cent for the second quarter of this year - 6.8 per cent gross. Flats fared slightly better, returning 4.3 per cent net, equal to 7.1 per cent gross.

Having been static since 1998, rental yields have made a 6 per cent leap during the first half of this year alone.

FPDSavill's 11 per cent growth prediction for this year looks a little bullish, considering many London agents are actually advising their landlords to hold rents steady to keep good tenants, or attract new ones.

Nevertheless, FPDSavills said rents had bottomed out and would reach 4 per cent net in the fourth quarter.

None of this would deter Hong Kong investors, insisted Linda Robinson, executive director of international property for Colliers Jardine. They look at the combination of yields and capital growth, and know that if the sales market slackens, the rental market improves.

Asian buyers in search of a prestige property should look at SW1 addresses - Knightsbridge, Chelsea, and along the Embankment, Ms Robinson said. Predictable advice, since Colliers Jardine will unleash units in Nine Albert Embankment Road on to the SAR market, through an off-the-plan exhibition next month. Prices will be £195,000 to £1.5 million, and units range from 500 sq ft to 2,500 sq ft, in what used to be the old British Steel building.

Those flats overlooking the murky River Thames will command a premium. Waterfront property, always first choice for Hong Kong buyers, generally costs 25 per cent extra in London.   - by Anna Healy Fenton  South China Morning Post     August 20, 2000

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