The UK property market is emerging as a preferred place to invest for Nigerians, particularly for those who got burnt in Dubai. They are returning to the UK because they believe the market is safe and can provide long-term yields, which the Battersea Power Station Development promises, writes Bennett Oghifo
Investors in real estate hate unpleasant surprises and this is the reason they seek safe markets where they expect their parachuts to open and, more importantly, where returns on their investment is long-term.
Dubai property market promises a lot but most Nigerians have come out bewildered by some investment experiences, which is compelling them to return to overseas markets that give them the desired returns and safety nets.
The UK market is attractive for many reasons but more importantly for safe investment and long-term yields promised by the various prime development such as the Battersea Power Station’s.
Interestingly, like projects of similar stature, the Battersea Power Station, a luxury residential led development that is evolving from the rubbles of a decommissioned coal-fired power station located on the south bank of the River Thames, in Nine Elms, Battersea, an inner-city district of South West London, is becoming irresistible to Nigerian investors.
Representatives of the developer said they have seen a growing interest from buyers in Nigeria “who are looking for the high level of returns they cannot get from the domestic real estate market. Additionally, the growing number of Nigerians attending schools and universities in London is increasing and many see London as the ideal city to put down roots and set up a base.
“Now the desert dust has settled on Dubai, shrewd investors from West Africa are returning to London – a city they know and love – for safe and secure returns on their property investments.”
They explained that “with a weak Naira, the majority of buyers from Nigeria are excited not just by the capital appreciation London offers, but also the good payment and mortgage plans available from UK banks and increasingly local banks like (Nigeria’s) Access Bank.”
According to Richard Vedelago, Chief Executive Officer of Wrotham Windsor, the leading London real estate advisory firm for West Africans, “If you’re a buyer from Nigeria, London is a good prospect for those seeking stable, long-term returns.”
Vedelago said, “The fundamentals of the London property market remain strong, due to a recovering economy, the fact that London is still thriving as a top financial centre, and the relative low supply of new projects in central areas.”
Another argument presented was that “Cultural ties remain strong between London and Lagos and at the end of last year, wealthy Africans were spending almost £4million a week on London property. Harrods Estates’ prime central London office in Mayfair has reported a 400 per cent rise in sales to African buyers in 2015, compared with the previous 12 months.”
The reasons for African interest, they said included the stability of the UK’s economy and political institutions, adding that a 2013 report from property consultancy Savills contrasted London’s residential sector with African markets, which “can be volatile with political unrest of a sometimes extreme nature” and can also suffer from “corruption, lack of regulation and a lack of transparency.”
In addition, some African nations also have longstanding Commonwealth connections with the UK, while a large number of opinion-formers have personal links, they said. The Nigerian Embassy in London, they said calculates that Nigerian nationals now spend over $446 million per year on fees, tutoring and accommodation at British schools and university. “Many wealthy Nigerians were UK-educated and send children to school here, for example,” said Camilla Dell, of Black Brick, a London-based buying agency, which — since 2007 — has seen 44 per cent of its clients come from Africa.
Yield for the adventurous…
Traditionally popular areas for wealthy buyers, such as Knightsbridge and Regent’s Park, have seen strong growth in capital values in recent years, but many developers believe that other central areas, which are experiencing urban regeneration, will see greater demand and steeper price rises in the coming years.
“The new generation of overseas buyer is much more adventurous,” said Rob Tincknell, Chief Executive Officer of Battersea Power Station Development Company, the company tasked by Malaysian shareholders S P Setia, Sime Darby and EPF with redeveloping this famous mixed-use development centred around one of the world’s most iconic buildings. “Many investors now realise that the best value is to be found in luxury residential in areas that are being redeveloped, and are very close to London’s key business, shopping and entertainment hubs.”
Prime London property remained an attractive proposition for African investors in 2015, with total returns in prime central and prime outer London markedly higher than other asset classes despite the backdrop of global economic uncertainties, according to a recent Knight Frank London report. The report forecast cumulative growth of 22% on London residential prices between 2015 and 2019 as demand continues to exceed supply. Prime residential yields currently stand at around 2.92 percent and are predicted to rise following the recent General Election in the UK.
Battersea Power Station is an example of a development in an increasingly popular area on the south bank of the River Thames, only 10 minutes’ drive from upmarket Knightsbridge, and a mere walk to Chelsea.
The project, which claims; “don’t do ordinary”, is essentially a vibrant new urban quarter on the site of a decommissioned coal-fired power station in a previously industrial area of the British capital. 4,000 luxury apartments designed by Foster + Partners and Gehry Partners will be set amongst offices, shops and parkland.
This sought after area is becoming a new green oasis in central London, with 20 acres of open space across the development, including a six acre park created next to the river, all connected by walking and cycle lanes, a river bus services and a brand new Zone 1 underground station.
Moving out for growth…
With increasing interest in properties on the south bank of the River Thames, where Battersea Power Station is located, it is anticipated that in the coming years values will be more closely aligned with those of the neighbouring districts of Chelsea and Westminster on the northern side of the river.
The combination of the new public transport infrastructure, the emerging desirability of the South Bank and the integration of arts and cultures as an essential part of the redevelopment is making apartments at Battersea Power Station attractive to buyers from around the world.
The major boost to residential values across Battersea will come as a result of the huge infrastructure changes which are taking place in the locality – the introduction of the Northern Line Extension, pedestrian bridges and great existing facilities such as neighbouring Battersea Park. Research by the Centre for Economic Business Research (CEBR) concluded that in 2020, when the Northern Line Extension opens, residential values at Battersea Power Station will grow by 9.7% making this area even more attractive to buyers.
Housing is a central issue in Britain, with the government recognising a longstanding undersupply of new homes for a growing population.
This shortage of space in central London will keep land and property prices trending upwards, and that the city’s appeal as a financial centre and leisure destination will continue to spur more and more demand.