When we say aggressive, we mean that they are offering to buy bulk units in Midtown, City and Docklands at up to 40% below the developer’s or vendor’s asking price.We expect vulture funds to have limited success in 2009 in Midtown and the City, instead they will turn their attention to Docklands bearing in mind the potential upside of the Olympics in 2012. With no sales or slow sales, for some hard-pressed developers and housebuilders outside of London unable to hold their assets for the rental market, bulk sales offer a solution to pay off debt rapidly, even if profit is foregone. In the regions, we have evidence that housebuilders are accepting 40-50% discounts for bulk sales, with 35-40% more typical of the Home Counties.

In Central London, including Midtown, City and Docklands Property, there is little evidence to date of bulk discounts being accepted. Some serious overseas investors with a long-term view are buying at more realistic rates of discount of between 10% and 15%. The movement of capital value and rents over the past 18 months has led to an increase in yields from 5.2% to 5.8%.

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