IPS SECURES TOP DEVELOPMENT IN UK
Dylan Burke - IPS
19 May 2008
2008 was set to be an exciting year for IPS, with its core focus being the expansion into new markets. IPS was awarded the mandate for Developer City and Docklands latest Canary Wharf development, which is due for launch in June 2008.
With prices starting from £199 000 and the project located less than 1km from Canary Wharf, this represents a fantastic opportunity to get into the UK market.
There are 5 very important factors to be taken into consideration:
UK Fundamentals ensure medium to long term growth. Although the sub-prime mortgage market has affected the UK market with a 50% decrease in mortgages offered from March 07 to March 08, the fundamentals are in place. This lack of mortgage finance has certainly slowed the market and the economists expect this to last 12 to 18 months. However, the banks will resolve this and most importantly there is a need for 210 000 houses a year in the UK with currently delivering at 170 000. There is demand which is the underlying component for property growth, both in rentals and capital appreciation.
The commercial component is doubling in the next 2 years with another 140 000 workers coming into the area, as it evolves into the financial hub of Europe and arguably the globe. This bodes well for strong growth in the medium to long term in this area, as there is limited space around this commercial hub, yet continual growing demand.
The average price for property in Canary Wharf is now around £800 / ft² with a new project recently topping the £1000 / ft². Most of the development has taken place in a southerly direction, towards the Isle of Dogs. However, space constraints and affordability is limiting this expansion and so now the development is moving north. It is where the Isle of Dogs was 3 to 5 years ago. It is undergoing Urban Renewal, with both residential developments and retail components being built. This is all currently underway and the area represents tremendous value at £525 / ft2. This is certainly an area which is going to see similar growth to the other side of Canary Wharf over the next 3 to 5 years and provides investors with a unique opportunity to get in early.
City and Docklands have a long history with South Africa, with their CEO, originally coming from South Africa and moving to the UK 20 years ago. They have sold over 600 properties into South Africa over the years and so understand the market and their needs. IPS; is very pleased to announce that they agreed City and Docklands to release their latest London development to South Africa first. Our South African clients will get the first opportunity to invest in this development with a road show, including models, pictures, plans, the developers, lawyers, mortgage team and structuring experts. You will have the exact same experience as if you went to the launch in London, except here you will get first choice!
IPS understands people’s financial requirements and we find that many people are selling assets in South Africa, or liquidating cash to invest offshore. The general consideration for developments in the UK is a 10% deposit within 28 days, which is very onerous on many investors. IPS has negotiated with the developers to allow for a more convenient payment schedule, where you will need to invest 2.5% now, 2.5% in 6 months and the balance in 12 months. The remaining 15% to 20% only due in 2 ½ years from now to completion!
Africa has recently been tipped by the World Bank as one of the highest growth areas in the world with over 50% of the countries having a GDP growing at 5%. There are fantastic opportunities in South Africa, where higher growth than the UK is possible, but the UK is one of the most sophisticated property markets in the world. What you lose in high growth you gain in stability and currency certainty. In property over the last 15 years there has been over 400% growth in South Africa and only 182% in the UK. However with depreciation of the rand, if you had invested in the UK, rather than South Africa 15 years ago, you would have over 240% more money now. Make your fast returns in South Africa and then invest them in the sophisticated and stable UK market, something wise investors have been doing for centuries to ensure wealth accumulation.
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