Oh dear, Standard and Poor’s has been at it again and this time they’ve upset the French.
Despite much Gallic protestation, including the amusing attempt to point the finger at us as being in front of them in the queue, France has lost its AAA credit rating and is now down to AA+. They’re not the only ones to suffer though, with Austria also going the same way and numerous other countries who have already lost their AAA rating slipping down even further. Portugal now has the “junk” rating of BB, so whilst it might be good for a golfing holiday I wouldn’t go sticking too much money there right now.
So how come France has been hit whilst the UK has managed to (for the moment at least) hold onto the top credit rating?
Simple, we’ve got London.
“I’m sorry my French friends; Paris is undoubtedly a buzzing and vibrant city and a major financial centre, but it doesn’t quite stack up to London on the global stage.”
I’m sorry my French friends; Paris is undoubtedly a buzzing and vibrant city and a major financial centre, but it doesn’t quite stack up to London on the global stage. Just take a look at the three major credit rating agencies for a start – two of them (Standard and Poor’s and Moody’s) have their headquarters in the US, but the third one, Fitch, is jointly headquartered in New York and London, highlighting how important they see it on the global financial markets.
It’s also something that is highlighted by the continued investment in London property, both commercial and residential, with figures that defy the stagnant and recessionary property markets that are visible in many parts of the UK and abroad. The trend is clear from the latest Knight Frank report, covered by the Financial Times recently, which highlights the difference in property value growth between rural areas and London. If you had been in the fortunate position to invest £5m in a home in 2009, putting it into London would mean you now had an asset worth £6.75m, whereas in the country you would only have made half a million on your initial investment.
Of course, a 10% capital growth over a few years is not bad in the current climate, but the 25% growth from London investment is simply stellar. One major factor in the healthy state of the London property market is an influx of cash from foreign investors, whether they be rich Russian oligarchs or new Chinese billionaires, because the track record of London as a major commercial centre has a solidity that defies any short-term economic woes.
“…the halo effect of a healthy London on lower value properties and suburban areas on the outskirts should make it a good place for keeping an eye on investment property…”
Furthermore, the capital invested in London seems to be staying there, so people aren’t cashing in their chips for a nice country estate – they think it’s going to stay very healthy in our capital in the future.
And with the Olympics just around the corner, there is a lot (and I mean a LOT) of money being invested in our capital right now, which is going to leave a lasting legacy that can only be favourable for the future. Okay, so we don’t all deal in five million pound properties, but the halo effect of a healthy London on lower value properties and suburban areas on the outskirts should make it a good place for keeping an eye on investment property over the next few years.
It might also be a key factor in helping the whole country get back toward a healthy, growing economy. To continue the Olympic theme, think of London as our star performing Gold medallist who inspires the rest of the team, with all the world looking up thinking “I’d like to be there”.
Except maybe France, who don’t seem to like their new silver medal very much.
About the author:
Mike Hoffa has been working in the property sector for more years than he cares to remember, as a tenant, first time buyer, second time buyer, landlord, adviser and general trouble maker. He keeps his real identity fiercely secret, but some say he can often be found at the back of property auctions howling, but only when a full moon is out. He’s also rumoured to be of average height, weight, ethnicity and class, which he claims accounts for his inability to be politically correct or wear pastel coloured cardigans.
Mike’s question of the week: Can London keep us on the AAA track?
This entry was posted
on Monday, January 16th, 2012 at 12:27 am and is filed under Mike Hoffa.
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You can leave a response, or trackback from your own site.
Mike Hoffa says “Time for some capital injection”
Time for some capital investment
That was the week in property, by Mike Hoffa
16th January 2012
Oh dear, Standard and Poor’s has been at it again and this time they’ve upset the French.
Despite much Gallic protestation, including the amusing attempt to point the finger at us as being in front of them in the queue, France has lost its AAA credit rating and is now down to AA+. They’re not the only ones to suffer though, with Austria also going the same way and numerous other countries who have already lost their AAA rating slipping down even further. Portugal now has the “junk” rating of BB, so whilst it might be good for a golfing holiday I wouldn’t go sticking too much money there right now.
So how come France has been hit whilst the UK has managed to (for the moment at least) hold onto the top credit rating?
Simple, we’ve got London.
“I’m sorry my French friends; Paris is undoubtedly a buzzing and vibrant city and a major financial centre, but it doesn’t quite stack up to London on the global stage.”
I’m sorry my French friends; Paris is undoubtedly a buzzing and vibrant city and a major financial centre, but it doesn’t quite stack up to London on the global stage. Just take a look at the three major credit rating agencies for a start – two of them (Standard and Poor’s and Moody’s) have their headquarters in the US, but the third one, Fitch, is jointly headquartered in New York and London, highlighting how important they see it on the global financial markets.
It’s also something that is highlighted by the continued investment in London property, both commercial and residential, with figures that defy the stagnant and recessionary property markets that are visible in many parts of the UK and abroad. The trend is clear from the latest Knight Frank report, covered by the Financial Times recently, which highlights the difference in property value growth between rural areas and London. If you had been in the fortunate position to invest £5m in a home in 2009, putting it into London would mean you now had an asset worth £6.75m, whereas in the country you would only have made half a million on your initial investment.
Of course, a 10% capital growth over a few years is not bad in the current climate, but the 25% growth from London investment is simply stellar. One major factor in the healthy state of the London property market is an influx of cash from foreign investors, whether they be rich Russian oligarchs or new Chinese billionaires, because the track record of London as a major commercial centre has a solidity that defies any short-term economic woes.
“…the halo effect of a healthy London on lower value properties and suburban areas on the outskirts should make it a good place for keeping an eye on investment property…”
Furthermore, the capital invested in London seems to be staying there, so people aren’t cashing in their chips for a nice country estate – they think it’s going to stay very healthy in our capital in the future.
And with the Olympics just around the corner, there is a lot (and I mean a LOT) of money being invested in our capital right now, which is going to leave a lasting legacy that can only be favourable for the future. Okay, so we don’t all deal in five million pound properties, but the halo effect of a healthy London on lower value properties and suburban areas on the outskirts should make it a good place for keeping an eye on investment property over the next few years.
It might also be a key factor in helping the whole country get back toward a healthy, growing economy. To continue the Olympic theme, think of London as our star performing Gold medallist who inspires the rest of the team, with all the world looking up thinking “I’d like to be there”.
Except maybe France, who don’t seem to like their new silver medal very much.
About the author:
Mike Hoffa has been working in the property sector for more years than he cares to remember, as a tenant, first time buyer, second time buyer, landlord, adviser and general trouble maker. He keeps his real identity fiercely secret, but some say he can often be found at the back of property auctions howling, but only when a full moon is out. He’s also rumoured to be of average height, weight, ethnicity and class, which he claims accounts for his inability to be politically correct or wear pastel coloured cardigans.
Mike’s question of the week: Can London keep us on the AAA track?
Tags: makeoffer.co.uk, Property, Property Auctions, Property Market Comment, UK Property Market
This entry was posted on Monday, January 16th, 2012 at 12:27 am and is filed under Mike Hoffa. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.