As a possible result to the credit crunch houses in Central London have taken a tumble of 1.5% in the first quarter of 2008. This has been a result of speculation in the City and expectations of new taxes in the Budget to affect non doms.

This whole scenario is affecting the annual growth potential by as much as 22%.

With many employees losing their jobs in the City of London due to the credit crunch issue, buying power and demand for property have been lowered tremendously. The Director of Savills residential research states that: “values aren’t bouncing back as fast as in 1998 and 2001 after dropping one or two quarters.”

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With all the doom and gloom surrounding the property markets, we felt it was about time to take a look at those markets that have remained robust and healthy throughout the current credit crunch. So here are five markets that have consistently performed well, regardless of the ups and downs seen recently.

Manhattan, New York

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Price per square foot can be an interesting approach to pricing real estate and we though it would be interesting to compare luxury condominium prices around the world to other types of space for sale. How much space in a luxury condominium would you get for £100,000? These prices are based on Knight Frank’s annual wealth report 2007 and may have changed slightly since then. These are the top ten contenders.

1. London

London currently tops the list. £100,000 buys you 43.5 square feet. Coincidentally, this is exactly the same footprint as the Ford Escape, an American SUV. So you can rest assured you will be able to park the car at this price.

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London once again defied the skeptics and remained on target for a 17% increase in value in 2007 despite falling prices in much of the rest of the country.

The Royal Institute of Chartered Surveyors reported that “house price growth remained negative for the second month in succession,” and “new instructions declined for the fourth consecutive month at the fastest pace since June.”

Having said that, London was the only region in their monthly survey to experience a rise in instructions, and according to the Financial Times House Price Index, “prices in London rose 1.1 per cent in August compared with July and the annual rate of growth accelerated to 17.6 per cent, from 17 per cent in July. This was almost double the pace of growth of the south-east, the area with the second-highest increases, where prices were up by 9.4 per cent over the year. The cost of the average home in the capital is £363,364, compared with the national average of £225,826.”

The FT index suggests that overseas demand, rising immigration and City bonuses are fueling the London price increases.

Some areas around the country were less fortunate with price drops reported in the North, East Midlands and Yorkshire & Humberside and stagnant prices in the North West, South West and East Anglia.

Whether or not London can maintain this continued growth in the face of credit squeezes, reduced mortgage lending and dropping prices in much of the rest of the country remains to be seen and many analysts are predicting a slow down or reversal before the end of the year. For the moment though, it looks as though London is shoring up the whole market.

Links:

The Financial Times

The Royal Institute of Chartered Surveyors

The Halifax House Price Index

The Land Registry House Price Index

London is supposed to be one of the most expensive cities in the world, but, having recently read a report on the cost of a parking space in Manhattan and reports of people paying upwards of £500 per month in Tokyo, I thought a comparison would be in order.

According to the New York times, this woman is cursing herself for not taking advantage of an opportunity to buy a parking space outside her loft apartment at $165,000 when she had the chance. A few months later, the spaces were changing hands for $225,000. Also according to The Times, the AVERAGE cost of a parking space is $165,000. Average.

London spaces have changed hands for as much as £250K but here are a few London bargains I found.

For the measly sum of £80,000 one can buy a garage on the Fulham Rd, SW6.

Craigslist also have a few bargains available, and this one jumps out. Considerably cheaper than the spot in Fulham. “I am selling my parking space in Whitechapel. It is on a private gated road next to the London Hospital. It is just outside the congestion charge zone so is very convenient for the City etc. It has been valued at £25K but I am keen to sell quickly.”

Sounds like a bargain to me. Although they might consider the use of an Estate agent to jazz the sales pitch up a little. “Bizou parking space in sought after neighborhood. Minimalist black, with no yellow in sight. Handy lack of walls makes for easy car positioning. Good renovation project. Might suit a young couple with small family.”?

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A Million Dollars. It certainly sounds like a lot of money. Just say it out loud: “A Million Dollars,” now say it slowly, “A Million Dollars.” It still sounds like a lot of money, but what will a million dollars buy in London, Europe or Africa or South America? As I began researching this article, the phrase, “One man’s meat is another man’s poison,” came to mind. Obviously, some countries vary widely from area to area, but here are some interesting properties for sale from around the world that all have the same price tag – A Million Bucks.

London. In London, one million bucks will secure a 3 bedroom flat in W6, a short walk from Hammersmith Broadway. This particular flat is offered by Foxtons and comprises one reception room, kitchen, three beds and one bath over 87 m sq. Leasehold with a share of the freehold.

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It could be the stuff of World War III: Arabs, Americans and Russians trying to outfox each other and seize control of valuable land. A new terror crisis? A stormy session of the United Nations? No: this is a typical scene from central London’s super-wealthy and overheated housing market, where the rich and famous compete for the rarest of commodities - a perfect property in a prime location.
The whole of the London property market may be hot at the moment, with the average asking price nearly £379,000, according to property website Rightmove, but central west London - from Kensington and Holland Park in the west, through Bayswater to the north of Hyde Park, past the mews of Mayfair and Knightsbridge and down to Belgravia and Chelsea in the south - is at melting point.

According to Rightmove, in Kensington and Chelsea average property prices have soared by £120,000 to £1,329,878 in the past month and by £620,000 in a year.
There are two reasons for this extraordinary increase: the first is pure economics: there are far more wealthy buyers than there are homes for sale. The second is status: when the world’s wealthiest buyers want to add another prestigious address to their real estate portfolio, they look to Pimlico rather than Paris, to Marylebone instead of Manhattan.

‘London has what the world’s richest people want - security,’ says Charles Peerless of Winkworth estate agents. ‘It speaks the new universal language of English, has an easy air hub at Heathrow, good schools, a welcoming tax regime for foreign owners, and the world’s financial capital in the City.’

In the past year Peerless has visited Singapore, Dubai, the US and (three times) Shanghai, to explain London’s property market to wealthy would-be buyers.

‘The number of high net-worth individuals (HNWIs) is expanding more rapidly in North America than in Europe for the first time since 2001, while Singapore, South Africa, Hong Kong, India and Australia have seen the highest growth in HNWI numbers,’ explains Liam Bailey of Knight Frank, an estate agent that at any one time has about 300 of London’s most expensive homes on its sales books.
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The saying “One man’s riches means another man’s poverty” rings truer than ever in today’s international real estate market. Price fluctuations, along with changes in demand and supply in different parts of the world are creating interesting representations of the value of money. Take for instance, what one million pounds sterling – approximately $1.9 million in US currency – can purchase.

In Edinburgh, you could buy an enormous town house boasting multiple reception rooms with expensive crown mouldings and chandeliers. Likewise, Oxfordshire offers you seven bedrooms, over six acres of land, and gardens.

Just east of Oxfordshire places you in London, where purchasing a home is an entirely different story. Because of a 28.6% growth in prices due to a combination of increasing demand and diminishing supply in prime real estate, the best locations in London could only give you 600 to 1,000 square feet. This increase in property value is largely due to wealthy foreign buyers from countries such as China, Russia, India and the Middle East. Instead of exchanging one piece of London real estate for another, these buyers come from outside the country, meaning the purchase of one property does not release the availability of another which ultimately drive prices upwards.

Despite this drastic difference in the UK, the value of the British sterling is not to be underestimated when taken overseas to the American continents, where foreign buying is not as rampant. Prices of apartments with dazzling Manhattan skyline views are down by a startling 34% from five years ago, giving you over 1,000 feet of luxury for $2 million. Prime locations in South America offer breathtaking island retreats with more rooms and luxuries than can be imagined.

In Angra dos Reis, a Brazilian city south-west of Rio de Janeiro with a beautiful coastline of over 300 islands, luxury villas are also a target for investment because of standard features like 8+ bedrooms, two saunas, swimming pool, waterfall, jacuzzi, barbecue, private beach and an ocean front pier. Like Brazilian broker Judice de Araujo Esteves says, “buying outside of traditional European and North American real estate markets is certainly more risky, but if they invest correctly, they can have better profits. This happens in all developing countries.”

The end result shows that moving out of the popular well-known areas of real estate and looking into carefully chosen emerging markets, opens up opportunities of high returns in the long run, which would only be a matter of time for parts of South America, Eastern Europe, and the far east set to become the next “London” in real estate.
Read more about this over at Forbes.

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Demand to rent homes in the U.K. rose in the fourth quarter at the fastest pace in nine years, the Royal Institution of Chartered Surveyors said.

A balance of 30 percent of surveyors reported tenant lettings increased in the last three months of the year, the highest since the survey began in 1998, the institution said today in London. Demand for houses outpaced apartments, with the balance reaching 34 percent, the highest since 1999.

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London’s ultra-high-net-worth individuals (UHNWIs) are driving house prices up the roof. These 4000 UHNWIs who are predominantly bankers, lawyers, traders, 23 billionaires and super wealthy non-domiciled foreigners have taken London property prices to yet another level.

Four Hyde Park facing penthouse apartments located on the exclusive address of Number One Hyde Park are reported to have been sold at an off plan sale price for a record £84m (US$164m) each.

Bowoter House before demolition

The Lord Rogers-designed penthouse apartments will each boast a staggering 20,000sq ft in floor space and would be amongst 86 other apartments that will span over four glass and red weathered steel apartment blocks replacing the now demolished hideous 16-storey 1950s building - Bowater House. The cheapest apartments are still said to command £4m (US$7.9m) each, making the development the most expensive dwellings ever sold in London at a shocking £4,200 (US$8,200) per square foot.

Purchasers including Arab princes and Russian oligarchs need to make an up front 20% deposit to secure the very highly demanded apartments that are due to be completed in 2010.

The project’s developers, Project Grande have contracted both interior design and development management to Luxury property developers – Candy & Candy. The two brothers from Surrey, domiciled in Monaco behind the Candy & Candy, Nick and Christian Candy, currently hold the record for most expensive flat in London, which is a £27 (US$53m) million luxury Chelsea pad.

While only the four penthouse flats would feature bullet proof windows, the entire development will have as standard an SAS developed security system, “panic rooms”, specially purified air conditioners and each complex will have a spa, squash court and private wine-tasting facility. Exclusive concierge service will be provided by the Mandarin Oriental hotel through a tunnel that will link the hotel and the development.

This record asking price is a reflection of the London property market which has out performed the UK market this year. In central London, the area that has experienced the most rapid growth, house prices have risen by 20 per cent in 2007 alone as compared to a 0.5 percent increase in London as a whole where prices average £260,140 (US$508,000).

What do you think about the London property market? Is it sustainable? Do you think the interest rate hikes will help slow growth down a bit? Or is a crash eminent?