London proved a powerful magnet for Irish property investors during 1998. They bought hundreds of apartments and provided a degree of relief for the London market at a time when it was feeling the shock-waves from the collapse of the Far East economies. For the first time, many London developers staged exhibitions in Dublin hotels to attract buyers. This led to a constant stream of investors to London, a feature that was again evident last weekend at several new apartment schemes in the city.

One London developer sold 30 Kensington apartments in west London in a single weekend at the Alexander Hotel in Dublin. The average two-bedroom apartment made £350,000 sterling. "We'd have been happy getting that sort of interest selling in Singapore at the height," says Jonathan Holman, sales director of developer Regalian, who sold the homes at the new Point West development in London SW7.

"The Irish investor has stepped straight into the shoes of the Far Eastern buyer and helped fill that gap in the market," says James Davies, who looks after investment and development in central London for estate agents Hamptons International. Before the financial crash of last year, almost 40 per cent of new residential developments in central London were being bought by Far Eastern investors, according to agents FPD Savills. Overall, the level of Irish investment is still a good deal lower than was customary from the Far East. Some agents estimate that Irish purchases are approaching about 25 per cent of what the Asians were spending at the height of their involvement in central London. That figure appears to be increasing, as developers like Ballymore Properties, Galliard Homes, Goldcrest and Regalian pitch part of their marketing campaigns at the Irish market.

Mr Davies says "For the last 12 to 18 months we have really seen Irish investors enter the market in considerable numbers and it has been snowballing since then." He says that with Dublin apartment prices so high and yields so poor, investors discovered London offered a good alternative.

Favoured locations include the traditional prime west London areas of Kensington and Chelsea, Westminster and up-and-coming areas such as the Docklands, Clerkenwell and Farringdon. Apartment prices in Canary Wharf, Wapping and other parts of the rejuvenated docklands make for attractive reading for Irish-based investors.

Some developers are offering rent guarantees. Regalian, for example, is guaranteeing a net return of 8 per cent at its flagship Kensington development, Point West. Other schemes are showing a rental yield of up to 10 per cent.

Few, if any, developments can match the extravagant style of St John's, the top-of-the-market development of 185 apartments in the former Westminster Hospital which has been a runaway success for Sean Mulryan's company, Ballymore Properties.

About one-third of the 147 apartments sould to date have been bought by Irish investors in the same way as they opted for one of Mr Mulryan's other major London schemes, Millennium Harbour, in the docklands. The final phase of 25 two and three bedroom apartments, including three stunning penthouses, are due to be launched next March. Investments in London apartments generally were adversely affected by the Bacon Report, which removed the deductibility of interest on borrowings against rental income for income tax purposes. However, the prices of spacious apartments in fashionable areas of London still compare very favourably with those in Dublin.

"The rental market in London is as strong as ever, and although the rate of price increases is slowing down, the anticipated capital growth of properties is in the region of 8 per cent next year," says Ronan O' Driscoll, of Hamilton Osborne King, which sold 150 London apartments to Irish investors in the past year.

In the docklands, two-bedroom, 825 sq ft apartments in the Limehouse Basin development, with parking spaces, are priced at £166,000, and buyers can expect rents of around £285 per week.

This kind of property in such a prime location represents considerably better value than is available in Dublin. Many of the homes have waterfront views.

ALSO in the docklands, two-bedroom apartments in the Royal Tower scheme priced at £285,000 are expected to achieve a rental income of around £400 per week when they come on the market in February, 1999. In the same area, a one-bedroom apartment priced at £130,000 will bring in up to £250 per week in rent.

First floor one-bedroom apartments with 541 sq ft in the London House development, Alders gate Street, adjacent to the Barbican arts centre, are to go on sale in the new year for £152,950.

These well-equipped apartments, built by St George developers, are expected to let for around £300 per week. Meanwhile, two-bedroom apartments in the same scheme priced from £238,450 are expected to rent from £450 per week.

At the lower end of the market, riverfront apartments in Woolwich, south London, could also prove to be a good investment. Priced at £62,000, the agents say they are showing a return of 10 per cent for investors.

Exhibitions advertising London properties such as these are regularly held in Dublin, and there is plenty of choice for those looking to broaden their property portfolio or those simply wanting a nest-egg for the future.

There is now a "constant stream" of Irish investors putting surplus funds into London's apartment market, according to Marcus Magnier of Jackson-Stops.

"People are looking at prices here, feeling that it is hard to perceive any value in the Irish market, and investing some of their assets outside the punt and the Irish economy."