Economy

xchrom

(108,903 posts)

56. Ultra-low yields suggest London property crash around the corner

Sun Jul 28, 2013, 08:58 AM

Jul 2013

http://uk.reuters.com/article/2013/07/26/uk-london-property-idUKLNE96P00I20130726

(Reuters) - Voracious investor demand for the best London property is approaching record levels that could trigger a price crash in popular areas such as upmarket Bond Street, property experts said this week.

The luxury shopping strip that is home to Prada (1913.HK), Louis Vuitton (LVMH.PA) and Cartier (CFR.VX) has ultra-low yields that mark it out as the most in-demand stretch of real estate in Europe.

The price of commercial property is dictated by the yield, which is the annual rent expressed as a percentage of a property's value. Yields fall as investor demand increases and push up real estate prices.

The 2.75 percent yield on Bond Street properties should fall to 2.25 percent by the end of the year and could hit the world-record low of 1.75 percent in 18 months, says David Hutchings, of property consultant Cushman & Wakefield, adding that the record was set by Taipei, Taiwan, in 2011.

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