Alphabet soup in London’s property conundrum
Posted on | July 4, 2009
By THE STAR
THERE are some places where only the rich can afford, where politicians, footballers and Russians congregate. Some of London’s prime areas include Notting Hill, Chelsea, Bayswater, Kensington, Knightsbridge, St John Wood, Hyde Park and West Hampstead.
Savills director Edward Lewis serves up some alphabet soup to give a broad overview of the different areas and how they rate. Instead of an A or B, the more popular letters in macroeconomics today are V, U, L and W. These letters are more graphic and illustrative of the shape of the recovery.
U refers to the market having a longer arc of bottoming before recovering. A V recovery shows the speed and strength of the bounce back mirroring the fall. An inverted L shows a long period of no movement or stagnation, an example being the Japanese economy, while a W signifies a period of ups and downs.
“When someone says the property has dropped 40% to 50%, they are talking about somewhere in a poor part of London, or city in Britain. I would suggest Malaysians concentrate on quality properties,” says Lewis.
His alphabet soup:
U: Mainstream London, Greater London, Canary Wharf, Wimbledon, Fulham and Richmond (both of them good family suburbs). More interest since January, 2009.
Now: £850 per sq ft
Was: £1,000 psf
V: Prime London, Knightsbridge, Chelsea, Mayfair, Hyde Park, Oxford Circus, Bond Street. More interest since March 2009, but this does not mean it is going to be easy.
Now: £1,850 psf
Was: £ 2,500 psf
L: Poorer suburbs of London, East London, Leytonstone, Hackney. May buy cheaply today but may take five to 10 years to recover because of repossession as a result of unemployment. The building of a stadium in Leytonstone in time for the London Olympics will help to push up prices.
Now: £350 psf
Was: £500 psf
Will a W surface for the London market? “We do not know because we do not know the shape of the curve. At the moment, we have turned the corner but only time will tell whether it is sustainable,” says Lewis.
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