Brokers, developers and estate agents in London have begun to speculate that the new wave of tower blocks and luxury apartments in Battersea and Nine Elms south of the river will struggle to find buyers.
Even though it is less than ten years since the last property crash hit in 2008 there are worries that another crash could be on the horizon. Many consider this to be a crash that was always coming.
For some time now investors from Malaysia and China have been buying apartments in London off plan and bankrolling developments.
However most of these luxury developments don’t ease the housing crisis and even the “affordable” apartments are way beyond the reach of anyone on the average London wage.
Up to 20,000 homes are planned for the Nine Elms development in London alone, however with China suffering an economic slowdown and currencies such as the Russian rouble and the Malaysian ringgit weakening against the pound fears are rising that overseas buyers may pull out of deals they can no longer afford.
World Architecture News ran a seminar for architects and construction professionals in London back in November, entitled “Is the bubble about to burst?” with compelling presentations given by Aecom, Arup and Alinea. The data presented showed an extremely complex market with London providing a safe-haven for eastern millions, even as their own economies were waning. Architects and construction professionals gathered for the event which considered the implications for the UK of a predicted slowdown in China which is now being experienced as Chinese purchasing power continues to drag.
Commenting on the economic situation in China, Liam Bailey, global head of research for Knight Frank, the London based real estate firm said: "We're moving into a different environment where you won't see the level of wealth creation in China that you've seen in recent years."
Selling prices in the London SW8 postcode fell 7% last year, according to the estates agents network LonRes, while 28% of unsold properties have been on the market for a year. Indeed some foreign investors are now selling off property without a profit.
To be continued…