Meet the developer who branded central London as “too hot” and has reaped the rewards from house price growth in the capital’s doughnut<\/p>\n
Michael Marx, chief executive of Development Securities, has been calling the capital’s central residential housing market “too toppy” for the past two years, and has today said his company has benefitted from demand for homes in Greater London and the South East.
\nThe developer, with a market cap of \u00a3238m, reported pre-tax and pre-exceptions profit for the six months to the end of August of \u00a318m, up from \u00a38.1m for the same period the year before.
\n“This significant growth has come from an increase in population, GDP and a shortage of homes in Greater London and the South East region. The capital is spreading out and we’re seeing the benefits of that,” said Mr Marx.
\nDevelopment Securities maintained its interim dividend at 2.4 pence per share and saw revenue jump up to \u00a392.4m from \u00a332.5m.
\nDemand for “normal” homes, often with a price point of \u00a3325,000, has driven the performance, Mr Marx continued, in areas such as Greenwich, Islington, Colindale – in Barnet, Ilford, Romford, Woking and Abbey Wood.<\/p>\n
Sales and price growth in many of the areas in which Development Securities operate are also being accelerated by Crossrail – the high speed rail network that will transverse London.
\nMr Marx said that following seven years of “neglect” in the British housing market there are many run down brownfield sites to pick-up, but that house price growth in the South East will cap in the coming months.
\nFollowing a series of forecasts that predict a surge in values in that corner of Britain, he said: “Prices in the South East have got further to go, but not that much further.”
\nHe also questionned what will happen to residential prices should central London’s status as a property investment hub change.
\nDevelopments in Dublin represent 10pc of the Development Securities portfolio as the Irish city’s housing market continues to recover.
\n“It is behaving in a similar way to London,” he said referring to the population spreading out.
\nTaking into account acquisitions of \u00a32.7m, and a \u00a37.9m exceptional item relating to the termination of a cross currency interest rate swap, the company posted a slight loss in pre-tax profit.<\/p>\n
The shareprice opened at 190p this morning (Wednesday) and fell to 187p by lunchtime.<\/p>\n
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