Weak sterling draws property investors to UK
More and more international property investors are choosing to transfer money to the UK in order to take advantage of favourable exchange rates.
According to London Central Portfolio, sterling remains fairly weak when compared with other major currencies around the world, including the renminbi in China. As a result, some overseas property buyers are seeing places such as central London as a particularly sound investment option.
The city was also identified as a good choice because it is much less volatile than other parts of the world.
"Many are looking for a safe haven asset class to take their money away from the turbulence of the eurozone and the Arab Spring," said Naomi Heaton, London Central Portfolio's chief executive.
She noted that others are reluctant to speculate in equities and are therefore opting to "accumulate through an asset-backed investment strategy". Ms Heaton said the fact interest rates in Britain are low is also helping to draw property investors to markets such as central London.
The cost of borrowing has been left on hold at 0.5 per cent by the Bank of England's Monetary Policy Committee since March 2009.
London Central Portfolio believes foreign buyers will account for the majority of those who purchase central London property during 2012. Ms Heaton said this is to be expected, because the number of wealthy investors around the world outweighs that in the UK alone.
"London Central is increasingly seen as a safe haven market which offers capital preservation with long-term upside potential," she added.
According to statistics from Savills, property values in the prime central London market went up by 14.1 per cent last year. This is nearly double the amount recorded in 2010, when values increased by 7.2 per cent.
Property values were boosted by a 1.1 per cent rise during the final three months of 2011.