Property

King’s Gold

King’s Gold

Argent’s King’s Cross redevelopment project offers a little of everything for every investor

Saying that London is a preferred investment location is like saying the sky is blue. It is one of the few cities in the world that provides investors with stability and almost universally guaranteed capital growth and/or returns. And unlike many cities, its lack of new development holds a charm of its own. With little space for new-builds, London has had to rely on urban renewal and redevelopment for its growth, and that means frequently historic properties in chic, cool, arty, businessy or any other “type” of district you could imagine. Hong Kong could take a lesson from it.

One of the latest of London’s redevelopments is at King’s Cross, in the coveted Zone 1— the stretch of city encompassing Hyde Park, Bond Street, Piccadilly Circus, Southwark, and London Bridge among others — is a £215 million 67-acre project that will be completed over the next 12 years. Eight million square feet in 50 buildings (23 of them providing office space) and new public spaces will make up the finished product. There will be newly refurbished railway stations (at King’s Cross and Pancras) and a new university opens for classes in September of this year.

UK developer Argent (Brindleyplace in Birmingham, Manchester’s One Piccadilly Gardens) is behind the project, which will include 2,000 residences and serviced apartments. Notably, the massive project includes some rare new builds, and Argent is going all out. “There has not been a development opportunity this large in the centre of [London] since the mid-19th century,” explains Roger Madelin, Argent’s joint chief executive. “We are building central London’s first new major street since Kingsway in 1906, along with 10 new public squares and a further 19 new streets. We are also … restoring 20 historic buildings and structures.” Those historic structures, many of them officially recognised as such, will be preserved and turned into retail, gallery and food outlets and comprise part of the new university.

That mix is one of the aspects that define the King’s Cross project. Hong Kong has seen its share of redevelopments — and it’s seen most of them turn into retail space.“The mixed-use design of King’s Cross is integral to the joint vision for the area … Office, retail and education accommodation will be ‘home’ for 35,000 jobs, the vital heart beat of any city,” Madelin states. It underscores investment potential and area growth, and he’s convinced it will only make London that much more appealing to tourists, businesses and investors. Above all, “Residents will be able to live, be educated, work and play in one of the most exciting parts of the most interesting city in the world,” he finishes.

However, London isn’t alone as a prime investment city. New York gives it a run for its money, and roomier, so-called new world cities like Sydney, Toronto and San Francisco have their qualities. But London’s limited supply and financial, cultural and political strengths keep it ahead of the pack despite steep prices. That said, “From a business perspective, uniquely in the world, companies in London can operate internationally during the working day; communicating with Asia in the morning, the USA in the afternoon,” theorises Perry Bousfield, director of property advisors Prime Portfolio. “From an investment point of view, the real estate market in London is very stable, whereas in Hong Kong it is volatile. London property therefore provides a good hedge for risk money for property investors from overseas, allowing them to invest in more reactive markets.”

Bousfield points to the constant flow of overseas labour into London as a regular source of rental demand for investors, its cultural and educational opportunities for homebuyers looking to relocate and, for lack of a better word, its “cool” factor and must-have status for affluent buyers that want a place to call home when they visit. Asian buyers accounted for 50 percent and US$1 billion worth of London property investment in 2010, one of the reasons Argent is showcasing its residential development in Hong Kong in early April, but, “Investors in the London property market come from all over the world; it is truly an international market, which adds to its stability, as it is not totally dependent on the domestic market,” Bousfield remarks.

And contrary to popular belief, you don’t have to be Warren Buffett to get into the London market if you’re willing to look beyond the fivestar districts. Many regions just off the beaten path offer good growth potential. “An upand- coming area for example is Westminster, where there is a good letting market and has been steadily improving over recent years,” Bousfield explains, also suggesting Covent Garden and other areas east of the city centre. In other words: Zone 2 or 3. “Realistically an investor in London is probably looking at a minimum entry level of £400,000 for a one bedroom flat on long lease.” Five million Hong Kong dollars for a flat? Sounds like a bargain. Makes you wonder what’s for sale in King’s Cross.