London has long been the destination of choice for Thai investors looking overseas, but with rising property prices, they urged to look beyond what were considered familiar and traditional areas for their next investment in the United Kingdom’s capital.
Thais have tended to focus on areas they are familiar with, namely areas surrounding Hyde Park such as Knightsbridge, Mayfair, Kensington or the West End. Properties in these areas have become even more expensive with prices now ranging from GBP2,500 to 3,000 per sqft in the Kensington area, and well over GBP5,000 per sqft for a top-end development such as One Hyde Park.
If you can still afford Mayfair or Knightbridge’s premium pricing, then focus your purchase in these areas. However, investors who are focused on maximising returns and capital appreciation should explore new development areas beyond their obvious choices, such as The City, King’s Cross, Victoria, or areas on the other side of the Thames bank such as Southbank.
Many areas previously perceived as unattractive have undergone regenerations and have become or are becoming areas with great capital appreciation potential. One up and coming area which has transformed over the last decade is the City and its’ fringes.
The City is still thriving as a business district, but now with an impressive range of bars, restaurants and a diverse retail offering, new residents are being drawn into the area and it is becoming a highly sought after residential location.
Household growth in the City and surrounding areas is expected to rise substantially over the next decade. CBRE Research in London estimates it will exceed the rate of construction by 60 percent. Given the demand is ahead of supply, we expect absorption rates to continue to rise.
Whilst the City has underperformed traditional areas of West London, this is now changing as price growths have outpaced prime Central London, with further room for growth. Prices have reached over GBP2,000 per sqft. In, 2008 average values in prime London were 60 percent above those in the City; today the gap is closing in at just 30 percent.
Shoreditch is another area on the City fringe that has undergone of one London’s most marked revivals in the last 25 years.
Previously characterized by print workers, clockmakers and metalworkers, the area is occupied by IT, media and creative professionals, and is becoming a popular rental district and the hub of innovation, home to everything from technology start-ups to small architectural firms.
Prices of new development schemes under construction in this area range from GBP 760 to 1,300 per sqft. Other areas surrounding the City to look out for also include Clerkenwell, Wapping, Bethnal Green and Whitechapel.
King’s Cross on the other hand is the most connected transport hub in Europe. With an investment of GBP4.5 billion for the area, there will be up to 30,000 people studying, living and working in King’s Cross by next year.
Google is also relocating its headquarters to this area in 2016, reinforcing London’s position as a leading technology and research centre.
It is clear that traditional prime boundaries are being pushed to new areas. and Thai investors should not ignore these opportunities.
Looking from a purely investment perspective, regardless of where your child studies in London or the convenience and lifestyle factor or personal preferences, it would make sense for investors to look beyond their comfort zone in terms of investment locations.
The timing in terms of exchange rate is also favourable with the Baht appreciating against the Pound and currently valued at THB 50/GBP 1.
In terms of the basic market fundamentals, London has always been a safe haven for investment with a strong legal structure, asset protection and multi-cultural society. Whilst there are tax considerations to bear in mind, the investment benefits tend to outweigh these concerns.
This article was written by Aliwassa Pathnadabutr, Managing Director of CBRE Thailand, and first published in The Nation on February 20, 2015. It is reproduced by kind permission of CBRE Thailand.
