Policy changes driving by the Grenfell Tower fire in London (UK) have implications for Hong Kongers looking at that market. Pak Shuen in London reports.
The horrific fire of London’s Grenfell Tower in June this year has led to a plethora of policy reactions in the UK. With Hong Kong buyers now being London properties biggest buyer, this is expected to lead to drastic changes in property preferences.
Since the Grenfell Tower fire, where more than 70 people perished, many questions and policy reactions have been raised, leading to anger and confusion of current property owners.
The Department of Communities and Local Government of the UK conducted seven tests of various building cladding and insulation since the Grenfell Tower fire of which four combinations failed basic fire safety requirements.
Many developments over three storeys with failed cladding have been instructed to implement temporary remedial measures, such as the hiring of 24/7 fire wardens.
In a heated owners’ meeting at one such development, one owner questioned, “There hasn’t [sic] been any changes in the standards for building material since Grenfell. So how come so many claddings have failed in subsequent tests?”
Another owner expressed grave concerns over the cost and effectiveness of the temporary measures, “The hiring of fire wardens in such numbers will only increase management fees by an astronomical amount. But how effective is it to have them simply watching whether the building has caught fire?”
As of yet, the government has not released a comprehensive list of developments and buildings using failed cladding. The London Fire Brigade, the department that ordered the temporary measures, also incurred the ire of the owners.
One owner said, “When I contacted management office asking for the paperwork proof from the London Fire Brigade. I was told that due to the urgency of the situation, the orders were given simply by a phone call. Sloppy.”
Apart from the increase of management fees, two other factors worried the owners. “As of right now, we have no idea how long these temporary measures will last? Or what kind of permanent measures, including the replacement of cladding will be required, leading to much confusion over cost for owners? To compound the problem, our property cannot be sold, unless we are willing to accept a gross discount.”
According to a recent report from property management company Jones Lang LaSalle, Hong Kong has become the number one source of buyers for London Properties in the first nine months of this year. As news of cost uncertainty to UK property ownership begins to percolate, it has affected buyers’ preference.
Peter Wong, Chief Economist at Hong Kong’s eFusion Capital, himself an owner of properties around the world said, “London properties are at a price level where buyers can only buy if they are not looking at the cash flow. But I am sure now with what is unfolding with the cladding issue, Hong Kong buyers will look even harder at properties in London that are in areas where development is limited by law, preferring buildings that are older, using materials such as brick on the outer facade, instead of the newer high rise developments that have been so fashionable.”
He has run The Canadian Chamber of Commerce in Hong Kong, founded The Lion Rock Institute and has over 25 years engagement in media, politics, policy and community engagement.
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