London homes worth more than islands in the sun
Click here to discover why a property in London has a far higher value than a tropical island three miles off the coast of Nicaragua.
The Labour Party candidate in the race to be Mayor of London angered estate agents when he suggested it is cheaper to buy a private island in the sun than to get on the property ladder in the capital.
Sadiq Khan, who has been MP for Tooting in south London since 2005, said 65% of the world’s small islands cost less than £340,000, but the average first-time buyer home in the capital is £364,000.
But estate agents have responded by saying property in London has a greater value than a slice of Caribbean paradise.
A spokesman for central London property business Plaza Estates says: “Pink Pearl Island, one of the places cited by Mr Khan, is about 3 miles off Nicaragua’s Caribbean coast and has a population that can be counted on the fingers of one hand.
“It doesn’t even have an airport and its electricity comes from a 5500w generator. No wonder the owners listed it for sale at $500,000 (£354,500).”
London, on the other hand, has a population of more than 8.6m and a GDP of $542bn (£385bn), according to the Office for National Statistics.
“It is no wonder property in London has a high value considering the size of the city’s population and economy,” says Mark Williams of London Bridge estate agent Williams Lynch.
Multicultural London is one of the best cities in the world when it comes to historic attractions, arts and culture, public transport provision and retail opportunities.
The British Museum attracted more than 6.8 million visitors from around the world in 2015, many of whom choose to invest in the city.
In fact, Mayfair estate agent Best Gapp recently reported that wealthy investors from the Gulf State of Qatar now own more than £1bn of property in this exclusive part of London that boasts some of the capital’s best shops and restaurants.
Chinese investors with their sights set on European markets are also targeting London because the city is the continent’s leading financial centre.
Since 2012 – the year London became an Olympic host city – China has committed over £10bn of investment in the UK – the majority of it in London.
Buying a home in London is also an investment. Property prices in the UK as a whole rose by an average of 4.5% in 2015, but that figure jumped to 12.2% in London
One of the reasons for this is a shortage of housing for the capital’s growing population. It has been estimated that London needs to build 59,000 homes per year to meet demand.
“Until that demand is met, it is likely property in many parts of the capital will continue to rise in value,” says a spokesman for Fulham estate agent Lawsons & Daughters where a home costs an average of £1,041,143 – close to three times the asking price of Pink Pearl Island.
London may not be blessed with the Caribbean’s climate, and Pink Pearl Island’s next owner may not have to contend with getting on a Tube in rush hour but buying a home in London is an investment that will pay dividends every day.
That’s why it’s far from absurd that most of the world’s private islands cost less than a London home, Mr Khan.