The boom in London property prices coupled with excessive demand for accommodation in the capital is forcing high-earning property investors to look overseas to add to their real estate portfolio, according to new research.

This year saw record City bonuses totalling an estimated �9 billion but the lack of supply of London property on the market forced many high fliers to widen their horizons when it came to spending their hard earned cash, report experts at the Homebuyer Show.

Many estate agents in the swanky City and Docklands area of London had less than ten properties for sale at any one time at the end of the year, an all time low for such a lucrative market.

This meant that some �4 billion worth of bonuses were invested abroad with property buyers spending their cash as far a field as Dubai, Bulgaria and the US as well as the historic British favourites of France and Spain. Read more

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Weakness in the US housing market notwithstanding, the global property boom continues apace. Property prices in the UK rose by just under 10% last year, according to the Nationwide building society, while many analysts expect a similar figure this year.

But that pales into insignificance compared with Kiev, where the BBC reports, prices have risen by 10-25% in the last two months of 2006 alone…

Kiev, the capital of Ukraine, is now apparently the “most expensive city in Eastern Europe” in terms of property, says the BBC. Prices at one development start at $1m for a three-bedroom flat, while the cheapest one-bedroom flats start at around $100,000.

Apparently, the cost of apartments is already higher than in Amsterdam. A number of reasons are given for this: “People simply want to move out of their old-style Soviet housing, and move into something more comfortable,” says property developer Jaroslav Kinach.

And then of course there’s the tiny group of massively wealthy businessmen who have flourished following the collapse of the Soviet Union.

But of course, the Kiev property boom couldn’t all be down to supply and demand and a small group of hugely wealthy business people, could it? There must be a pretty wealthy population to support a city where the cheapest one-bedroom flat costs in the region of £55,000, surely? After all, that may not be London prices, but there are certainly a few far-flung parts of the UK where you might just be able to get a one-bedroom place that cheaply.

So what’s the typical inhabitant of Kiev earn? $25,000 a year? Maybe $15,000? Read more

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London may be the world’s most over-priced real estate market.

In trendy Knightsbridge, a 77-square-foot former storage room is being marketed as a studio apartment. The asking price – $335,000 or $4,340 a square foot.

The basement room has a tiny shower and a shallow closet, two hot plates and a sink. Adding electricity and heat to make the place habitable will cost an additional $59,000. Read more

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A prison cell-sized apartment without electricity is on sale for 170,000 pounds ($335,000) - another sign that London’s property market is booming despite rising costs and stagnant salaries.

Anywhere else this dilapidated studio might not have attracted such price. But this is London, where a 77 foot-square former storage room is being marketed as an investment property in the exclusive Knightsbridge neighborhood.

“It’s about the size of a ship’s galley,” said Andrew Scott, the director of Lane Fox, the agency handling the sale. “But it’s permanently anchored to one of the wealthiest neighborhoods in the world.”

At more than 2,200 pounds ($4,340) a square foot, the mortgage buys a spot within walking distance of tony stores like Harrods and London’s iconic Hyde Park. Originally conceived as a maid’s room, the apartment at 18 Cadogan Place hasn’t been used for years and is littered with trash bags and crumbling paint.

A coffin-sized shower is en suite, and storage is provided by a shallow closet and 10-inch deep shelves cut into the wall. Two hot plates and a small sink make up the kitchen. Two dirty windows allow the light to filter into the basement apartment, and the fire escape could conceivably double as a shared patio.

With no electricity or functional heating, Scott said it would cost as much as an additional 30,000 pounds ($59,000) to make the room habitable.

“It is an investment,” he said, as he stretched his arms the width of the room, laying his palms flat on opposite sides of the wall. Read more

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For Sale: Sealand, a sovereign nation with its own national anthem, stamps, and coins. And it’ll only cost you $975 million to own it.

Sealand is a 5,920-square-foot artificial island in the North Sea created by Britain during World War II. It was abandoned after the war ended until retired Army Maj. Paddy Roy Bates took it over and declared it a principality in 1967.

Despite Britain’s best efforts, the courts upheld Bates’ claim of sovereignty and territorial waters. The 85-year-old Bates now lives in Spain. A Spanish real estate company is helping him sell Sealand, promoting it as a base for online gambling or offshore banking.

Source: The Associated Press (01/16/07)

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Sure, 2006 was full of “real” real estate news — home sales sagging, builders’ stock plummeting, people offering everything from Hummers to free college tuition to sell their homes.

But the fringes of real estate were chock-full of their own kind of news in 2006. Some of my favorites:

- A British real estate agent who said he was sick of the glowing euphemisms too often used in real estate ads decided it was time to be bluntly honest.

He chose to describe some homes as “grubby, cramped and dirty” or “having all the charm and poise of a vicar on crack.” In one ad, he wrote, “It’s difficult to imagine a more disgusting house than this.”

Julian Bending of Somerset, England, told local news media that his blunt approach had been well-received and that would-be clients thanked him for his honesty. Read more

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The New England Economic Partnership, a regional nonprofit forecast organization, predicts that the area’s home prices will remain flat through 2010 and fall short of the U.S. forecast of 2.1 percent growth per year through the decade’s end.

Permits to build new homes are expected to decline an average of 6.2 percent per year in all New England states through 2010, as builders reduce their investments in response to the soft market. Read more

Real Estate

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People buying holiday homes in France, the most popular overseas destination for British second home owners, are increasingly taking out French mortgages rather than buying with cash, reports Assetz Finance.

Traditionally, the majority of British purchasers of French holiday homes to use personally have purchased their property outright, without any loans, using savings, inheritance or equity release on their UK property to finance the purchase. On the contrary, investors buying buy to let apartments or French leaseback properties would rarely consider financing their purchase in this way, intending instead to maximise their returns through the use of bank gearing and a minimal 15-20% deposit.

However, over the last twelve months, Assetz Finance has noted a rise in the number of British holiday home buyers opting for a French mortgage, from approximately 33% in 2005 to 50% in 2006, as people begin to recognise that they are both readily available and easy to use as a viable method of finance. Read more

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The choice of country to buy property is determined by different reasons. The apartments of different types are bought in European capitals to get education or to do business. The most popular cities for such purposes for last hundreds of years are London Paris and Helsinki.
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