what happens when foreign money leaves London property?

[dulwichgirl2]

As I understand it, foreign investors have flooded into prime London and those luckly enough to own in those areas have taken advantage of it to sell and move to the new UK prime areas such as Fulham, Clapham and Battersea/WW. A lot of Claphamites have mvoed into SE London in one shape or other.

When the Euro crisis finally unwinds, and the foreign investment leaves prime London, does the whole pattern reverse itself? I really don't know but it worries me that the reversal, if it comes, could combine with the awful UK outlook to generate a massive property crash. Now, you may say, that would not be such a bad thing. I'm not sure that the magnitude I'm anticipating would be a good thing for anyone really, save cash rich developers.

What do you think Can anyone better qualified than I am explain what is likely to happen over the next few years? THank you

[Huguenot]

You've confused the attractiveness of London property with the Euro crisis.

The attractiveness of UK property is to do with the devaluation of sterling by around 30% in 2008 due to the credit crunch.

This meant that overseas buyers could get 50% more for their money.

Whilst industry and exports remain depressed there is no likelihood of a significant increase in the value of sterling over the next few years.

A global economic depression may generate a requirement for investors to repatriate/liquidate money, but as with the rpevious observation, the world's jogging along the bottom of a depression at the moment and I don't see any significant changes ahead.

[dulwichgirl2]

That's very interesting, thank you.

Of course we will not be looking to strengthen sterling as it suits manufacturing industry to keep it weak I imagine...

HOWEVER, it just occurs to me - how does that square with everyone saying Brits should buy in the eurozone as the prices have dropped owing to (a) local prices genuinely dropping but also significantly owing to (b) sterling's stength?!

[Huguenot]

I think that depends what perspective you choose.

I was making a global generalisation about the weakness of sterling.

I guess whoever said that to you was simply trying to take a two dimensional snapshot that simply compares sterling with the euro, rather than a basket of global currencies.

Generally though, I'd still regard sterling as weak against the Euro. Only a few years ago it was ?1.50 to the pound. Although it's increased around 15% this year, it's still only ?1.25. Hardly a position of strength in that context.

Somebody making an observation about property investment regarding the Euro would probably be making the observation that sterling is only likely to weaken against the Euro in the long term. Certainly a Euro without peripheral players like Greece would strengthen wildly. Ruinous for the continent, but parasitic investors and speculators wouldn't care.

To be honest, since I can't see the UK being much more than a bit player on the edge of 3 to 5 world superpowers of Europe, the US, China, Brazil and India I can't see sterling going anywhere but down in the long term.

[El Pibe]

Just on a quibbly aside, I can't see Brazil ever being a world superpower, and India, well, maybe in a century or two, but it has HHUUUUGGEG hurdles to overcome before it comes close.

Even China has many challenges soon to face before it can start flexing that sort of influence.

In fact what we may need to ask is not who will be future superpowers, but will the US realise hanging on to that status is a false economy and we may return to a more multipolar world of big powers with spheres of influence rather than the peculiar post-total-war concept of superpower?

Anyway, back to dg2's equally peculiar obsession with greeks bearing up in London to buy houses..

[????]

The Swiss...now there@s a bit player whose currency has gone down the toilet....er.... Singapore, there's another poverty stricken bit player, etc, etc. Superstate PAH...they're on the wane just as Huge has got the hang of them. The US is likely to be more insular going forward as Shale/oil and gas is going to put it a s anet exporter and self suffucient in fuel within 15 years, so only it's ethnic links with Isreal will then bother it with all the 'orrible despotic/corrupt oil countries in the Middle East and Russia. I hate the word, but it (shale energy) is a 'gamechanger'.

UK property - is a reasonable value, very secure asset, safer than banks/Hedge funds etc for all those arab/Greek/Russian/East European and now, in socialist France, we can add French millionaiires trying to put their cash somewhere

[Huguenot]

I didn't realise how much the Brits were in favour of banking secrecy and benevolent tyranny Quids - seems much has changed since my time.

If Britain were as small as London, it would already be a tax free state with three bedroom terraces at ?3m, but it's not.

I meant economic superpower EP, China's already there. Few more years yet for India and Brazil.