Euro Zone Financial Instability = London Real Estate Surge?
This story of European buyers scooping up London real estate is a nice demonstration of how the interconnectedness and complexity of markets can lead to all sorts of unexpected outcomes. While in London this week on a research trip, Dowe met someone who is struggling first-hand with this phenomenon. This person is currently in the market for a home, but fast sales and rising prices driven by these foreign buyers are frustrating his efforts to buy. He is even more exasperated by what he encounters in Knightsbridge at night: entire swaths of prime real estate are dark because these buyers are leaving properties unoccupied after purchase (and many are not even renting them).
Worsening financial and political turmoil in southern Europe caused a surge of interest in London property last month with buyers from Greece and Spain showing strongly among investors seeking a safe haven for their money…The number of Europeans buying property in London has grown steadily over the last year as the euro zone debt crisis has worsened but numbers spiked ahead of elections in Greece last weekend that failed to produce a government.
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Growing interest from Greece in the last three weeks has been buoyed by buyers looking to rent out property as an investment, said Noel de Keyzer from Savills. “There seems to be an endless flow of wealthy Greek buyers, old Greek family money, coming to London both renting and buying.” In addition to countries afflicted by the euro zone crisis, the best London homes have attracted growing interest from Russia, the Middle East and Far East as buyers attempt to protect their assets amid the gyrations of the money markets. Interest has pushed prices for so-called prime central London properties up by 44 percent in the last three years, more than twice the increase across London as a whole, Knight Frank said.