REAL ESTATE BOOM

Hawke's Bay Tribune, Volume XXIV, Issue 196, 2 August 1934, Page 7

REAL ESTATE BOOM

Due to Fall in Interest BIG DEMAND IN BRITAIN England is in the midst of a real estate boom as old-fashioned and conservative in its character as John Bull himself, writes Ferdinand Kuhn in the “New York Times.” It has taken the form almost entirely of a tremendous demand for rent-paying properties for safe long-term investment. The speculative element in it is relatively slight. It is utterly unlike the fever that gripped the New York real estate market in the years preceding 1929. and equally unlike the post-war boom in England, which filled the countryside around London with jerry-built cottages.

This time tho clamour is not for individual hout.es or office buildings, Lut for land on which houses have already been built and leased over long terms of years Fortunately for the blue-blooded families, the majority of Londoners still pay rent twice —once in ordinary rent to the owner of their houses and once in ground rents to tho owners of the 11 md on which tlieir houses stand. And it is ground rent properties that are in such demand to-day that estate agents are swamped with orders to buy. The demand to-day is estimated to be twice as great us in 1929, when new skyscrapers were sprouting like mushrooms in New York and the prices of American real estate were soaring. Only a small part of the demand is being satisfied, chiefly because land owners like tho Duke of Westminster own vast tracts of ground rent properties in t*he heart of Loudon, and arc quite content not to part with their holdings. Actually the turnover, therefore, consists mostly of comparatively small parcels of property in outlying parts of London or of central London properties thrown on to the market by executors of big estates. There is also a brisk investment demand for country estates where ' small farming tenants still pay their rent to squires, almost as they did in feudal times Like the recent boomlels in metals, raw wool, and other durable commodities, the present activity iu real estate is a by-product of tho depression, especially of the full in interest rates. Much of it can be 'traced directly to the British Government’s colossal conversion operation, which pushed down interest on the Government war loans to n meagre 3.) per cunt. AVith the industrial shares risky and with foreign bonds positively dangerous, British capitalists have been racking their brains during the past year to find mi investment as safe ns giltedged stocks, yet yielding more. If England, wore a now country or if London ware constantly moving uptown,” the investment hi real estate would be something of a gamble. But London still has the stability of an ancient capital, despite the shift of business to 'Hie West End in recent years, An ordinary street which is residential to-day cun usually be depended on to remain residential twonty-flve years from now.

And an ordinary London lease is s long-term affair, averaging 21 yean and sometimes running to the fantastic 999-year term. The difficulty is 'to fine iqiOUgh of these properties on the mar kef. That is the problem which is breaking the hearts of many estate agents throughout Southern England. One cannot conclude from the activity in a real estate office that press perity has come back to England. Acre; of floor space are still empty in offici buildings in the financial district, am even the handsome new office building; near the Houses of Parliament are mi filling up as 'their promoters had hoped A prodigious amount of private con struction is going on to the tunc o more thug 250,000 new houses in Brit ain this year, but much of this i speculative. The same can be said o purchases of farming land in mail' parts of the country, stimulated by tin Government’s efforts to do somethin' for British agriculture. If the present demand proves any thing it. is that vast reserves of capita are still lying idle, and that Govern iiient stocks are no longer attraetiv, enough tn tempt even )lie most caution 1 investor,