http://www.businesstimes.com.sg/sub/...91140,00.html?

Published February 3, 2009

Foreign buyers pick up prime London homes

Sterling's fall offers them huge savings; but local sales dry up, with prices in UK down by up to 30%

By JANE MOIR
IN LONDON


POCKETS of London property are becoming increasingly attractive to foreign buyers as sterling plummets. But the outlook for the country as a whole remains bleak as transactions grind to a halt.

Areas such as Kensington, Belgravia, Knightsbridge and Chelsea are seeing strong demand from foreigners who stand to reap huge savings because of recent currency movements.

Estate agents are rapidly slapping 'sold to overseas buyer' on property advertisements in London shop windows - the only evidence of real activity the market has seen in months.

Prices across the country are down by as much as 30 per cent from a year earlier, with domestic sales all but drying up as would-be buyers fail to obtain credit.

But the outlook for overseas buyers is rosy. With sterling having lost 35 per cent of its value against the euro and 30 per cent against the US dollar in the past year, bargains are to be had by foreigners with cash to spare.

Research by Savills shows properties now cost 50 per cent less for Japanese investors and 40 per cent less for buyers from Hong Kong, Singapore or Taiwan, as well as Eurozone investors.

'With global bargains like these, the start of the recovery may well be driven by equity-rich investment from the Far East or Europe,' according to Yolande Barnes, head of residential research at Savills.

Research by Hamptons International revealed a 20 per cent rise in the number of Europeans buying prime London sites in 2008. And Hamptons expects London property to remain attractive to overseas buyers throughout 2009.

'This (currency movements) makes the UK property market far more attractive to overseas buyers, and the net impact combined with price falls for this sector, equates to more than a 50 per cent drop in the cost of buying a UK property,' the estate agent said.

Likewise, overseas buyers are increasingly finding the office market attractive. Demand for office space in London declined 27 per cent in the third quarter of 2008, according to Jones Lang Lasalle.

'However, London office property is becoming increasingly attractive to overseas investors as sterling's record low is making UK assets look cheap,' said Damian Corbett, head of West End investment for the estate agent.

The market for residential property in London as a whole, however, remains uncertain as buyers struggle to secure mortgages a