(MENAFN- Arab Times) The National Bank of Kuwait (NBK) held a seminar on 'London and Paris Property Markets - Recent trends and Outlook' on Tuesday May 15. 2012 at the Salwa Al Sabah Ballroom, Marina Hotel.
Liam Bailey, Head of Residential Research at Knight Frank presented an update on the Central London and Central Paris residential markets. He stated that the London residential market had performed well in the last three years in terms of prices and activity with the market coming out of the recession in 2008. Price growth in annual terms has remained strong over the last few years in prime London, "Not only has the prime London market outperformed in regional terms in recent years but actually the Central London market has outperformed in historical terms.
We are seeing a much stronger revival in the last three years than we have seen in previous upturns."
The recent upturn from March 2009-12 is recorded close to 45% signifying a much stronger revival value and demand for central London in recent years. The strong recovery has been impacted in part by the weak pound. "There is no doubt that the beginning of the revival of London residential market corresponded with the pound crashing against the dollar and the euro in 2009."
Prime Central London property prices in relative terms to different currencies show that despite the 45% rise in value a dollar based buyer avails an 11 percent discount now from the price in the previous peak. For a Chinese Yuan buyer, it is 21%. "So the currency discount has been a major part of the attraction of the London market in the current time," he affirmed.
Market fundamentals of demand and supply have had a strong revival impact on the Prime Central London market as it continues to be a very undersupplied one. Forecast indicate the need for 374,110 new properties to accommodate growing households in the next eight years while the total amount of properties with consent to build stands at 214,825 significantly less than what is required.
The current shortfall is estimated at 42.5%. In addition, second home demand is rising rapidly and now accounts for around 30-% of all new home developments in central London. It is also important to note that foreign student demand has risen by 31% over the last two years.
There is a trend for affluent parents to buy properties for their children studying University in London, adding to demand for accommodation while not releasing properties into the market.
Bailey highlighted some recent changes in terms of taxation such as the introduction of a new SDLT rate of 7% for residential properties over £2m from March 2012. In addition, residential properties over £2m purchased by non natural persons, such as companies will incur a new SDLT rate of 15% from March 2012. He informed that the government will consult on a proposed annual charge on residential properties valued at over £2m owned by non-natural persons from April 2013.
Addressing the matter of how stable the London market was, he stated that London stands out as a city market at the head of the pack behind growth centers in Asia â€" Hong Kong and Beijing. The London market has become more diverse in the last few years with globalised demand.
"In the past 12 months, we have seen African, African, Middle Eastern, Australasian and European money coming into the market", he said. Citing the Wealth Report, he stated the London made it to the top of the Global cities survey for the present and future.
Bailey shared that new developments in London through 13 key hotspots have been working to extend value beyond the boundaries of central London, pushing it further south and west to the city fringe.
Kevin McCauley from CBRE, shared recent trends and outlook for commercial property markets in London and Paris. After providing a brief backdrop of the economic environment, he shared that London was expected to outperform the UK in real GDP growth in the coming years.
London has re-established its lead as a global financial center, overtaking New York, Hong Kong and Paris.
Looking at recent office occupier trends, McCauley highlighted that subdued take-up continues in Central London while the West End remains the strongest performing market. Office availability rates are on the rise and secondhand release drives the rise in City availability.
The Office Investment market has affected a strong rebound in the first quarter of 2012 with Central London office capital transactions. Of the 115 billion euros invested in Europe in 2011, 19 billion euros came from outside of the European region in 2011.
Almost a third of that capital was invested in London. He shared that London and Paris were the most liquid of European markets in 2011. The 2012-18 period entails a large number of lease events with Central London lease breaks and expiries looming.
McCaulay shared the investment market outlook that expects Prime London to prove most resilient with more release of bank stock with implications for secondary overseas buyers providing strong support, rental growth driving capital values.
The NBK provides real estate services in London in property sales and purchases, property renting, property valuations, legal consultations, property insurance, bill payment service, offshore services, among others.
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