ST : Olympics may boost East London home prices

Apr 18, 2010

property

Olympics may boost East London home prices

Area is being re-invented prior to event

By Jessica Cheam

London: Think Olympics 2012, and you'll invariably think of East London.

Age-old images of the East End's grotty streets and its infamous serial killer Jack the Ripper are now being re-invented as the area undergoes the biggest makeover of any Western European city in recent history.

And as with all Olympic legacies, the big question on property investors' minds will be: Will property values go up as a result? Is this the time to invest in East London homes?

London property analysts whom The Sunday Times spoke to say there is potential upside in the price recovery of East London homes since the financial crisis of 2008.

Latest figures from the UK Land Registry show that house prices in Hackney and Tower Hamlets - regarded as indicators for East London - have risen about 12 per cent since April last year, when they were at the bottom of the market in the aftermath of the global financial crisis.

Sales and marketing director Sheena Ellwood of East London developer Telford Homes noted that there is still another 12 per cent to 13 per cent to go before East London home prices reach their 2008 peak levels before the crisis hit.

'The regeneration surrounding the build-up to the 2012 Olympics has continued to stimulate demand. Potential for capital growth is much higher in East London than in the areas already established such as prime and west London,' she said.

At the heart of East London's regeneration is Stratford - one of the capital's most diverse and economically deprived areas - chosen for its supply of sites for redevelopment, as well as the green spaces of the Lower Lea Valley.

Stratford is poised to become a major transport hub soon, when Stratford International Station opens this year, which will provide services to Paris and Brussels via the Eurostar train service.

The Olympic Park at Stratford will comprise the Olympic Stadium, Aquatics Centre, Hockey Centre and Velopark, as well as the Olympic Village itself which will house the Olympics athletes in 2012. A �4 billion (S$8.5 billion) Stratford City mixed-use development is also located next to the Olympic Park.

One project within walking distance of the Olympic Park launched recently: Matchmakers Wharf, by Telford Homes, which offers 209 units ranging from studio apartments to four-bedroom units starting from �150,000 or �298 per sq ft (psf).

It is due for completion in 2012.

Managing director Doris Tan of Singapore firm DST International Property Services said that 'at this level, prices are very affordable. It's much less than what you'd pay for new mass-market homes in Singapore'.

Some other projects to consider include the 242-unit Greenwich Creekside, in the London borough of Greenwich - also hosting the Olympics - which offers one- to three-bedroom units from �400 psf, some with views of the river Thames.

Further from the Olympic Park, other East London properties on offer are Baltimore Wharf at Canary Wharf and and 21 Wapping Lane at Wapping where one- to three-bedroom units are selling from �550 psf onwards at both projects.

Singapore investors are not taxed on capital gains for British properties but they will need to pay tax in Britain on their rental income. There are also no ownership restrictions on buying and selling property in Britain.

Property investors should be aware, however, that the risk of investing in off-plan homes such as in Stratford is the uncertainty surrounding an emerging but unproven residential area.

CB Richard Ellis' head of residential development agency Jonathan Seal noted that such projects are attractive 'dependent on the location'.

'But I would be cautious. The amount of new property coming to the market may suppress capital growth and create a surfeit of rental property in the marketplace,' he said.

However, Mrs Tan feels the risk is minimised for Singapore investors.

'The pound is at its weakest and that adds a further discount to the purchase price. At near-bottom prices, the potential for upside, especially on the back of the Olympics, outweighs the risk,' she said.

jcheam@sph.com.sg

This is the final of a two-part series on London properties.