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London properties retain 'safe haven' status

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6th Dec 11 9:51 am

The eurozone debt crisis has not affected the London property market’s status as a safe haven for investors, according to a property investment company.

Properties in the capital are outstripping the property yield benchmarks set by the Land Registry, according to IP Global, meaning London continues to represent a strong investment choice for investors.

Analysing the average annualised unleveraged returns of its investment projects, the company said Islington performed the strongest of all areas of the capital, offering an annualised return of 11.5 per cent. Tower Hamlets developments in Cobb Street, Mulberry and Myrdle Street offered an annualised return of 4.5 per cent, while the Grange Gardens project in Southwark delivered returns of 3.5 per cent.

IP Global director Robert Pearce said the results demonstrated there was value to be had in the London market, even outside the most sought after areas of the capital. He said: “With the turbulent year of 2011 nearly behind us, IP Global is encouraging Middle East investors to consider alternatives to the so called golden postcodes of Mayfair, Knightsbridge, Chelsea and Belgravia.

“Throughout 2011 investors have increasingly viewed the London real estate market as a relatively safe haven for capital, driven in part by the social and economic unrest in Middle Eastern markets.”

“The mature legal framework that underpins the UK property market, low cost of borrowing and under supply of housing stock in key areas of central London are all factors that have attracted foreign investment to London, especially from Gulf countries,” added Pearce.

Looking ahead to the new year, Pearce believes Middle Eastern investors in particular will look to put their money into assets in light of the world’s precarious economic situation. He said: “We expect this trend to continue into 2012, as Middle Eastern investors seek long term stability through real assets, amidst increasing volatility in global equity and bond markets. Equally, we are encouraging our clients to diversify their portfolios into new London boroughs, in order to open up new opportunity.”

Meanwhile, lender Halifax has found the average house price in the UK was only marginally lower in November than at the start of the year, suggesting the UK property market has remained relatively stable throughout 2011. The average house price was £161,731 last month, just 0.7 per cent lower than December last year, the company found.

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