Residential project: The London City Island residential development project, launched on May 30, is one of Eco World Ballymore’s three projects in London.
ECO WORLD Investment Co Ltd (EWI), a private vehicle controlled by Tan Sri Liew Kee Sin, is boosting London’s housing capacity with three new projects that will add 2,773 units as the city strives to meet growing demand.
The units will include 2,463 private housing and 310 affordable homes developed by Eco World Ballymore, a 75:25 joint-venture company between EWI and UK-based Ballymore group. EWI will have the majority stake.
The three projects – London City Island, Embassy Gardens and Wardian London – will be launched within the next two years with a total gross development value of £2.257bil (RM13.33bil).
To boost growing housing demand in the city, The London Plan, conceived by London authorities, aims to build 42,389 homes per year in this growing metropolitan that recorded the fastest growing population in Europe with 8.6 million last year.
However, the NHBC Annual New Home Statistics, an independent authority on the housing industry, showed that London registered only 28,733 newly-built homes in 2014, from 26,230 homes in 2013.
During a visit to London City Island last month, Liew told StarBizWeek the supply of housing in the city is rather limited.
However, the city has small pockets of land and regeneration sites.
“We are offering three developments with prices ranging from £820-£1600 per sq ft (psf) in different parts of London,” he says.
Liew, whose chairmanship in Battersea Project Holding Company Ltd expires on Sept 30, 2015, says he will not be extending his tenure in the company as he wants to fully focus on Eco World International Bhd.
Although there is a supply gap in the city for homes, Liew who is also the chairman of Eco World Ballymore, says it is a tough competitive market.
“But we are very clear (about our focus and strategy). We want to provide the best product, best service, best pricing and connectivity.
“In London, there are two factors that differentiates me from my competitors. These are the service I am going to provide to my customers and quality control,” Liew says.
Despite the keen competition, Kenanga Investment Bank head of equity research Sarah Lim, says buyers of properties from Eco World will get a return on investments, either from rental and/or capital appreciation.
Lim expects Eco World International Bhd to continue its landbanking in London and Australia considering its current pace of their expansion.
Eco World International Bhd will also be seeking a direct initial public offering via a market capitalisation listing on Bursa Malaysia after withdrawing its special-purpose acquisition company application.
Meanwhile, Eco World International president and chief executive officer Datuk Teow Leong Seng expects London property prices to increase on the back of rising global demand and scarcity of housing supply.
Savills Malaysia deputy managing director Paul Khong says based on recent reports, UK house prices are reported to be on the rise again after the Conservative election victory.
Savills Research forecasts prices in the London market to rise 22.7% over the next five years.
It also expects rent to surge 17.1% on average until the end of 2019.
“All prime areas in London are forecasted to have a 35.4% growth in the next five years,” the research report says.
Savills Research also said London’s prime housing market increased by an average of 1.6% in the second quarter of 2015.
The housing market activity and price growth over the next five years will lead to an increase in the number of people leaving London, boosting house prices growth across the rest of UK, the report says.
According to Khong, the majority of Malaysians will be looking at one- to 2-bedroom apartments priced between £600 psf and £1,500 psf, with a total maximum cap of about £1.8mil (RM10mil) per unit generally. The projects offered by Eco World Ballymore fall within the price range expectations of Malaysians.
“Buyers’ demand and confidence are still robust and moving strongly into the summer now,” he adds.
Khong points out that London is a familiar place for many Malaysians as many have studied or have relatives there. Many would want to own a piece of real estate in Zone 1 or 2.
Many have bought into UK properties for their children who are studying there or as private investments.
Despite the falling ringgit, Khong notes that many local investors are actively looking at foreign investments especially in properties to hedge their risks.
“Many are looking at reorganising their investment baskets with a little more emphasis on overseas properties now. We expect many will be looking for some investments, especially in the UK.
“They are looking for a strong currency to house their money or investments, and also capital appreciation from property investments,” he says.
Khong says foreign investors are also treated equally in UK with no “additional buyers stamp duty” or other conditions which deter foreign investments such as restriction in re-sales.
Risks are always much less in properties and many are familiar with these locations. Both have fairly similar land systems and are prepared to commit to some degree of exposure on forex in their investments.
“Investors are looking towards parking their money in London as it is a safe haven. London has been a favourite destination for investments worldwide. There is demand from the Russians, Arabs, Chinese and Malaysians,” Liew says.
Sean Mulryan, chairman and group chief executive of Ballymore group told StarBizWeek: “London property market prices are expected to be steady. It is the only place in the world where you can have corrections but recover very fast”.
On Ballymore’s tie-up with EWI, he says: “We have the same mindset in developing large-scale projects. We plan to walk together on many (more) projects as we are very good business partners.”
Over the last several months, Bank of England governor Mark Carney says he expects the central bank’s next move to be an increase in interest rates despite low inflation in the country.
The central bank has been keeping interest rates at the 0.5% level since the depths of the financial crisis.
Mulryan says he does not expect a significant hike in interest rates to have an impact on the property market in London as UK has a very well managed economy.
