Greek investors are buying up London property in increasing numbers as they seek a safe haven away from the debt crisis engulfing their homeland, property agents said Thursday.
With their country's possible exit from the single currency now openly discussed amid political turmoil, some Greeks fear keeping money at home could be a huge mistake and are scrambling to pull it from the eurozone entirely.
Many Greeks appear to regard putting their savings into London homes as a good alternative, as the market is relatively stable and offers reliable returns, agents say.
"Greeks have been a part of the central London market for quite some time, but about 18 months ago their numbers began to increase," Liam Bailey, head of residential research at property consultancy Knight Frank, told AFP.
Richard Barber, a partner at estate agent W. A. Ellis, which focuses on property in upmarket districts such as Chelsea and Knightsbridge, said interest had spiked in the past three weeks as the crisis in Greece escalated.
"They'd rather have their money in prime London property than sitting in Greek bonds," he said.
"I think London property has a reputation for being a safe haven."
Until recently, Greeks accounted for about half a per cent of all London property sales over 2 million euros ($A2.69 million), but this figure had tripled to 1.5 per cent over the past year, said Bailey.
Greek buyers in London accounted for about 250 million worth of transactions in the market in the past 12 months, he said.
"Greeks are not dominant, but they are relatively important at the moment," he added.
That compares to Russians - the biggest foreign buyers in London - who account for 6.5 per cent of the market, with French, Italian and Hong Kong nationals, each making up about three per cent of the market.
Up until a year ago, Greek interest in London property was driven mainly by the weak pound, but this had been replaced by a sense that investors were pulling their money out of Greece as confidence evaporated.
In recent months, "it's become more the capital flight issue", said Bailey.
"You've got people in Greece with a lot of assets who are looking to put those outside of Greece and outside the eurozone at the current time."
The instability was highlighted on Wednesday when hopes of a breakthrough in naming a new leader for Greece were dashed again as politicians failed to agree on a candidate.
On Thursday, however, a new premier was finally named - Lucas Papademos, a former central banker who helped manage Greece's entry into the euro a decade ago, but it remains unclear how much he can do to stabilise the country's strained finances.
Bailey said it seemed likely that Greeks would be flocking to snap up London property for the foreseeable future.
"Until there's some sort of sense of clarity of where the eurozone issue goes in Greece, that sort of trend will continue," he said.
International buyers, particularly from the eurozone, are playing an increasingly important role in the central London residential property market which is now considered as a safe haven for wealth rivalling that of traditional prime West End locations, it is claimed.
Property consultancy EA Shaw, in its spring residential market update for its central London patch, reports an increase of 78% in instructions in the first quarter of 2012 compared to the previous year.
The area’s average residential prices rose by 7% in 2011 and are up 25% since 2009 with prices forecast to increase by a further 7% during 2012, driven by eurozone money and strong domestic demand.
The lettings market remained strong with a 3.7% increase in average rents in the first quarter of 2012 with international tenants playing a major role, accounting for 68% of properties let.
‘Looking at the continued political and economic instability within Europe, the residential market is set to strengthen further during 2012,’ said Lisa Hollands, EA Shaw’s head of residential.
This resilience in the market is demonstrated by one record deal in Covent Garden, where £2,676 per square feet was achieved for an apartment at Capco’s The Henrietta scheme.
The firm says that a limited supply of quality property and strong demand from the flight of euro money to what is perceived as the safe haven of prime central London property, combined with steady domestic demand are driving the price increase.
During the first quarter of 2012 eurozone buyers were the most dominant of international buyers, accounting for 36% of all purchases. Purchases were split between 56% international and 44% domestic buyers. Investment purchases comprised 38% of the total.
Domestic UK buyers dominated the resale or second hand market, being responsible for 67% of sales, but only represented a fifth of new build sales where international demand was the most important.
In terms of purchasers’ professions, financial and legal were the majority at 55%. Such buyers sought pied à terres in locations with good investment potential, within easy access of work and transport links to family homes for the weekend.
EA Shaw’s research covers an area of prime central London including Covent Garden, Soho, Fitzrovia, Bloomsbury, St James’ and the City fringes.
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