Real estate boom in London: financial investor secures building land for one billion euros

Real estate boom in London: financial investor secures building land for one billion euros

London is considered a cosmopolitan city, it offers one unmistakable mix of culture, business and education. Over the years, she also benefited from the increasingly strong internal migration back to the cities. Young people found a family there, where the economic environment is given and the quality of life is correspondingly high. Thus, strong investments are being made in new construction projects, some of which will find a buyer before the start of construction. Recently, the US investment firm Lone Star took a chance and secured fresh land of approximately 17 hectares in the London area. The purchase price, which they were willing to pay, is close to one billion euros.

Price trend is positive

That London still offers sufficient development potential these days is shown by the sometimes tough bidder contests for central building land in the British capital. The comprehensive local transport connections and the high number of well-paid jobs make it possible to convey high-priced real estate to corresponding customers. Although the price level is already well above average anyway, there are hardly any indications that something will change in the near future. Too strong is the continued influx of immigrants and migrant workers, too diverse the reputation of the city that brings together people of all lands and religions.

With the purchase of Quintain Estates, Lone Star proves that supply and demand are also reflected on a larger scale to let. Because the building land, it is now, is relatively close to the new Wembley Stadium. What is actually to emerge, however, remains open at first. For Quintain Estates is indeed the building land, but this has no corresponding building permits. So an immense increase in price and the recommendation of analysts to accept the offer of Lone Star, the logical consequence after announcing the takeover bid. The US investment company is well-versed in the British real estate market and is one of the largest private-sector players.

As fewer and fewer properties are currently being offered for sale, demand is either increasing or decreasing. As a result, correspondingly high purchase price levels for sought-after residential complexes will continue to be realistic in the future.

What shapes the London real estate market?

To understand why London is so much in the focus of international project developers, the history of the city must be considered. It has always been a center of attraction, not least because of the centralized British state system with Westminster as its center. Culture, politics and economy are integral factors here. Thus, there are heavily industrialized parts, as well as pure residential areas and mixed, central areas with a high proportion of commuters. All this makes the city robust and makes the sheer size and reputation of the metropolis make it a center of project developers. The real estate crash in 2007 was not able to change that in the long term either, because only then did the record levels in the real estate sector now known have been reached.

In 2014, however, there was a small break when house prices rose by around 5.9 percent from July to August fell. This marked the third consecutive month of falling real estate prices. Immediately thereafter, brokerage firms reported increased interest in selling homes and apartments. At the same time, hesitant demand on the part of buyers became apparent, house prices now more questioned and real purchases postponed. Taking the analyzes of brokers and independent research institutes as an opportunity, the market will continue to grow in the future. However, the pace will slow down, which is also related to the fact that the proportion of refurbished or renovated objects remains high. And exactly this development potential is seen as an argument, which is why housing prices in London will stabilize at a high level in the long term.

A not inconsiderable part of the buying transactions in the London real estate market is attributable to foreign investors. They seek investment opportunities for high cash reserves and keep the market in motion. More and more Britons, on the other hand, are struggling with more expensive mortgages.

High-priced properties have their share of the new-build sector

But in what form is construction actually being built in London and which sections of the population are oriented to this offer? In order to answer the question, it is necessary to look at the statistics on building permits and the construction projects of the development companies. In the equally noble and popular district of Kensington and Chelsea is, for example, Earls Court, a world-famous exhibition and concert hall. Big names of the international music scene appeared here. But now the building, which dates back to the 1930s, is to give way to a modern apartment block ensemble. That these tend to be more in the high-priced segment and the price development will only give new impetus, is already clear.

The building land prices and conditions allow nothing else. Thus, this project is in the midst of the general trend, as recent surveys indicate that about 54,000 homes under construction or planned are only available for a purchase price of over one million pounds sterling. And a not insignificant part of these apartments is not used or rented, but serves as an investment property. This creates neighborhoods that look as if they have died out or are actually populated as residential and commercial areas only during the day.

Summary

The US investment company Lone Star has announced the purchase of the British real estate company Quintain Estates. The offer is 131 pence per share, which ensures a good 17 hectares of land in the immediate vicinity of the Wembley Stadium. Concrete development plans do not yet exist, but analysts expect high-priced apartment complexes. At the same time the price level settles accordingly.

Artikelbild: © chbaum / Shutterstock


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