The recent influx of foreign money into the London prime property market, due to the turmoil in Europe, the Middle East, and the Far East (as the Asian property bubbles start to burst), has fueled steep property price increases. However, it has had a chilling effect on the UK investor, as there is now a dearth of properties available at reasonable prices.
Those investors looking for bargains won’t likely find them in London, since many of the potential victims of the Sovereign Debt Crisis, Arab Spring, and Asian property bubbles have pushed property values higher in the city. Foreign investors won’t blink an eye at spending over £3,000 per square foot for an ideally-located property in Central London. These fearful investors, however, are not looking for high returns on income-producing assets, but, instead, they are focused on the preservation of wealth.
While over the long term, London will always be a grand city and one that will grow in value, over the short and medium terms, UK investors, Sovereign Debt victims, and Asian and Middle Eastern buyers should be looking elsewhere for price growth and decent returns.
New York is a much less expensive option than London and perhaps a more profitable investment, especially in the short and medium terms. For instance, the average price of a condo was $1,200 per square foot and luxury property (top 10% of all sales) was close to $2,000 per square foot, both much lower than comparable Central London properties. Of course, New York does have its own super-prime properties like One57, 15 CPW and One Beacon Court, to name a few, that can break the bank (at up to $10,000,000 per square foot).
Both the New York City residential and commercial markets have bounced back and are strong and stable. We expect continued growth in the NYC market with the pickup in the economy, which is beginning to show signs of a stable recovery.
Many UK investors (and foreign buyers) would prefer to finance their real estate investments, so they should know that a number of banks offer mortgage financing to foreign nationals in the US. For instance, HSBC Premier has a very favorable foreign buyer program.
Source: Anthony Guerriero and, in part, by Andrew Brecher, a senior partner at Brecher Solicitors nominated by “Property Week” magazine as one of the “Fifty Most Influential People in the UK Property Industry.”