Samir Salya on Luxury New-Build London Flats Failing to Sell

With Brexit uncertainty on the horizon and the hike in stamp duty for second homes coming into place, many rich overseas investors are turning their backs on the UK. This is particularly affecting the London property market. According to property data experts Moloir London, more than half of the luxury apartments built in London last year failed to sell.

“Posh ghost towers”

The report released by Moloir London shows that builders started work on 1,900 apartments priced at over £1,500 per sq ft in 2017. Despite this large volume, only 900 have sold, leaving almost half of these properties dormant.

On top of these properties, the market is saturated with high-priced luxury apartments that are failing to sell. Moloir estimates that there are an extra 14,000 unsold apartments on the market priced between £1000 and £1,500 per sq ft. They further state that this current build-up of apartments on the market would take at least 3 years to sell if sales continue at their current rate and no new properties are added.  With a farther 420 residential towers, each at least 20 storeys high, planned for the city, it looks unlikely this oversupply is going to clear up son.

According to Property Buying Agent Henry Pryor, the London luxury new-build market is already seeing too much supply. With not enough demand to meet this, as a result of financial troubles and uninterested foreign investment, the market is facing potential damage.

Speaking to the Guardian, Pryor states: “We’re going to have loads of empty and part-built posh ghost towers. They were built as gambling chips for rich overseas investors, but they are no longer interested in the London casino and have moved on.”

Overseas investors desperate to sell

Luxury new-build homes are facing further pressure from the influx of luxury properties on the market. Overseas investors who bought in the last couple of years are now trying to sell their property ahead of uncertainty for the London property market.

According to Steven Herd, Founder and Chief Executive of MyLondonHome, an agency specializing in luxury new-build investments, this problem is set to grow. Herd suggests that hundreds of Asian investors bought London developments off-plan during the market’s peak in 2015-16, in the hope of a quick profit. As these developments are being sold off closer to completion, it is becoming clear that investors are losing hundreds of thousands of pounds.

Herd states: “They intended to flip [buy and sell on] the apartments and make big profits, but it hasn’t worked out like that, and now they are trying to get out at the smallest possible loss.”

This is leading to the property market looking increasingly less attractive to potential investors, resulting in more properties coming onto the market as they look to leave the city. With London losing its appeal, more luxury homes are likely to remain unsold for longer as fewer buyers want to invest in the region.

Moloir’s report concludes that developers are facing a rocky and unpromising future for luxury properties in the capital. With continued development and falling interest, it’s unlikely these issues will be resolved in the coming year.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.