London New Apartment Sales Jump as Investors Snap Up Rentals
London Gets New Home Sales Boost as Investors Snap Up Rentals
(Bloomberg) -- Sales of new London apartments accelerated in the final quarter of 2019 as developers offloaded properties in bulk to investors.
Buyers snapped up 16% more of the homes in the three months through December compared with a year earlier, according to a report compiled by researcher Molior and seen by Bloomberg News. That was the strongest quarter for sales since the start of 2018.
Developers that ramped up construction following the financial crisis have been caught in a pincer of tax hikes and political uncertainty that’s dented demand. Institutions have taken advantage of the glut of unsold properties, with their purchases jumping to 31% of all sales in the fourth quarter, according to the report. The December election result has also brought more certainty, while demand has grown from Hong Kong investors amid unrest.
“In developments where units are completing faster than marketing suites can sell them, there are several examples of last-minute bulk deals,” the report’s authors Sam Long and Tim Craine wrote.
A representative for Molior declined to comment on the contents of the report.
Around 29,500 homes being built in the city remain unsold, or about half of the total. And some 3,900 properties that have been completed are yet to find a buyer -- up 44% from a year earlier.
The problem of unsold homes is particularly acute in outer London, where completed and unsold homes has almost doubled, with those that are too expensive to qualify for the government’s Help to Buy loan program proving particularly hard to shift, the report said.
“The number of schemes where construction has stalled is growing,” the report said. “Usually the projects involve smaller developers, and this raises questions regarding the due diligence carried out by the projects’ funders.”
--With assistance from Neil Callanan and Lucca de Paoli.
To contact the reporter on this story: Jack Sidders in London at jsidders@bloomberg.net
To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Chris Bourke, Patrick Henry
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