“Bullion in the sky”

“Bullion in the sky” – One Nine Elms continues the overwhelming trend for significant foreign investment in London’s Property Market from the Middle East and China

In early 2014, Boris Johnson stated an intention for new residential projects in London to avoid being perceived as “blocks of bullion in the sky” for foreign investors. With the extravagant luxury provided by developments such as One Nine Elms, it is very difficult to foresee this intention becoming reality.

The residential towers at One Nine Elms (pictured above) provide 46 and 60 storeys respectively of bespoke real estate fully serviced by a five-star hotel. The towers alongside the Nine Elms development area generally have unsurprisingly drawn in some of the World’s largest property developers. Dubai-based Damac and China’s Dalian Wanda, led by China’s wealthiest man Wang Jianlin, were quick to invest in the Nine Elms development site and market the real estate back in their respective countries. The main thrust of much of the Nine Elms regeneration generally is off-plan selling in the Middle and Far-East, with many investors purchasing properties based on innovative CGI’s and creative marketing.

London’s property market has long been seen as a secure and lucrative means of investment, which explains Dubai’s substantial presence in the capital. Cash from the Emirate city has contributed to the exponential rise of investment in London’s property market and the United Arab Emirates (UAE) as a whole now accounts for 18 percent of buy-to-let property sales in the UK. Furthermore, Gulf Cooperation Council (GCC) Countries accounted for the highest percentage of buyers in London’s property market with 1.99 billion pounds in the last quarter of 2014.[1]

Chinese investment however is having an increasingly significant influence on London’s residential property market. The instability of the domestic Chinese market, which is reliant on fluctuating government policy, alongside the saturation of the domestic market has created an increased focus on London and other Western cities for cash rich Chinese investors. As a consequence, Chinese investment accounted for 11 per cent of all property transactions in London above £1 million in 2014, up from 4 percent in 2012.[2]

One Nine Elms is just one of many developments profiting from this vast influx of foreign investment and represents the first overseas project outside of China to be developed by Dalian Wanda, the leading Chinese real estate group. The Landmark development is set to cost a staggering £900 million highlighting the significant level of investment from the Chinese Group.

A necessary by-product of this development is the need for a legal conduit to convert financial investment into legal ownership. Taylor Vinters residential team, based in the iconic Tower 42 in the City, deals with some of the legal work in relation to the One Nine Elms development. The team, which includes multiple Mandarin speakers, handles the sub-leasing of plots from the large property investors to foreign nationals wanting to secure their piece of London’s “bullion”.

The nature of this leasehold work succinctly portrays the extent of foreign investment spread across several layers of property ownership. Not only do the developments attract some of the largest property investors in the World but they then in turn market the properties to affluent foreign nationals who are not expected to see the finished product of their personal investment until late 2018.

Development proposals similar to One Nine Elms are being conceived across central London and the overwhelming trend for foreign investment in London’s property market shows no signs of receding. It is, unfortunately for the incumbent Mayor of London, difficult to describe these developments than anything other than “blocks of bullion in the sky”. That is, unless you’re a member of the Taylor Vinters residential team, in which case they represent a copious amount of negotiating and drafting… but sadly not keys to the Penthouses.

[1] (according to research carried out by Alax Wheatley, Head of London Sales at dubai boutique real estate agency Luxhabitat on behalf of gulf News)

[2] According to Knight Frank, research for FT http://www.ft.com/cms/s/0/fcc2d346-bcd3-11e4-9902-00144feab7de.html#axzz3odXJYXhP

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