From Kuala Lumpur: How Britain is exporting its homes
Britain is now exporting its homes en masse.
Another set of towers, in model form, are backlit in the suite of a 5 star hotel.
Capital Towers is in fact a project in Stratford, East London, part of the Olympic Park regeneration plan. The flats are up for sale at events like this that span east Asia, and in Kuala Lumpur, 6,500 miles away.
Buyers crowd around the models checking out the floor space and attractive features of living in Stratford, measuring the distance to Heathrow by tube and the yet to be completed Crossrail project.
This foreign sales drive is repeated in Hong Kong and Singapore, targeting investors across Asia.
“The past few years there’s been exponential growth in UK housing market. I’d be buying for [rental] investment. Stratford for me is on the outskirts but travelling time is not too far by train about 20 minutes.
“The UK government is going to invest to develop,” said Kelvin Lin, a prospective buyer who visited London once a few years ago. “There are no restrictions [on buying] in UK, the agents said there were in Australia”.
Another buyer says she like London because “it has a very good rental market, lots of professionals”.
But it’s not just the super rich – an oligarch buying a bolthole in Mayfair. These are upper middle classes of the world looking for a safe bet for their abundant savings- the London property market.
It’s a quite a sales job. Right now Capital Towers doesn’t actually exist: it is half derelict factory half the Bow hand car wash. But it is due to complete by 2016. There’s still plenty of time to fulfil the typical 18 month build time for a project of this type.
“[Foreign buyers] have become very important. We’re all aware of the difficulties of raising debt,” said one housing analyst. Knight Frank calculate that 75 per cent of new builds are going to foreign owners, half of those from East Asia.
I’ve already reported about One Commercial Street, the project that the chancellor chose to symbolise the rebirth of the economy under the coalition.
Developer Redrow confirmed to us that 40 per cent of the cost of the total project has been raised by selling flats in East Asia. That is considerably more than 50 of the 137 private flats on the development.
Seventy flats are for affordable housing, and have a separate entrance.
Does this matter? On the one hand, who cares if the world’s supersavers use our capital city as a property piggy bank. On the other, some developments are not put on sale to Brits, or they are at a later stage and a higher price.
The foreign purchases are cash purchases that help to fund housebuilding that is not funded by weary banks. East Asian investor appreciate the macroeconomic and legal stability offered in Britain.
A KL estate agent told us that the trade is essentially “a currency hedge” made possible through the fall in the value of sterling.
Tellingly, other nations, Australia and Singapore have laws to restrict this type of flow of property purchase.
Indeed, investors we met in KL said that the free-for-all in London was one of the principle attractions versus say Australia (where a foreigner can only sell property to an Australian) or Singapore (where foreigners are not allowed to rent their flats, have more than one, own houses, sell within five years, and many pay an additional stamp duty of five per cent).
So additional stamp duty on these transactions is an intriguing policy suggestion.
Above all, if Knight Frank are right, surely the London Assembly or the DCLG need to be counting out the “exported” homes.
Only then will we have a real idea of what the shortfall is. And we may just find out that what little housebuilding there is, is of limited benefit for the British property dream.
This is part of our #brokenladder series.
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