Telford Homes, the residential property developer focused on brownfield sites in the east end of London, said pre-sales already secured should lead to a sharp increase in profits next year.Meanwhile, trading this year has been proceeding according to plan, with the company on track to meet full-year expectations. House broker Shore Capital is forecasting profit before tax for the year to the end of March 2012 of £2.5m, rising to £7.5m next year.Telford said it enjoyed a strong sales performance in the first six months of fiscal 2011/12. The company exchanged contracts on 288 open market properties, a 30% increase on the first half of last year.A lot of the demand is coming from overseas, specifically Hong Kong, Indonesia and Malaysia (Kuala Lumpur)."Some of the overseas interest is for buyers interested in providing housing for family members in education in London, but mostly it is investment driven," Telford's chief executive officer Jon Di-Stefano told Sharecast.As for UK buyers, the company said the majority of buyers are owner-occupiers but it has recently seen a sudden upsurge in interest from the buy-to-let crowd. "Investor demand has only just come back. It took us a bit by surprise," Di-Stefano confessed.Finance director Katie Rogers said that her perception is that those buyers acquiring property for investment properties are doing so for the rental income, rather than in expectation of making a quick turn on a house sale.Asked to make a guess at what sort of yield these buy-to-let investors might expect to make from renting out Telford-built properties, Di-Stefano ventured that it was probably somewhere between 5.5% and 6% a year. The Avant-Garde development in the area between Liverpool Street station and the Brick Lane curry-house district was the most significant contributor to sales in the first half of the year, with 186 sales achieved, of which 124 were secured at three road-shows held overseas.The location is right in the heartland of Tower Hamlets, one of the poorest boroughs in the country and one of the areas on which Telford focuses most - the other old favourites of the group being another poor borough, Hackney, plus Newham. However, the company has widened its focus into adjoining areas of North and Central London where higher priced properties are in demand both from overseas investors and UK buyers.Telford is also shifting its product line away, somewhat, from the first-time buyer market, largely because of the difficulties such buyers have in securing mortgages."We work on a two-year time scale, and we don't see the first time buyer market recovering much in that time frame in areas like Barking, Dagenham, Romford and Tottenham," Di-Stefano said.On the subject of Tottenham, scene of the recent riots, both Di-Stefano and Rogers said the civil unrest had had a minimal impact on the appeal of East London as a residential area. The share price rose 2p to 65p on the release of the upbeat trading statement. Shore Capital refrains from assigning a rating for the company's shares as it Telford's Nominated Adviser (NomAd) on AIM, but it did note that "the shares are trading on a colossal (52%) discount to last reported NAV [net asset value] (c130p as at March 2011), which we consider to be excessive."The broker added: "Strong forward sales visibility underpins future NAV increases (we forecast NAV rising to 139p per share by the end of 2013 and expect a further meaningful uplift beyond this point when strong sales at Avant-garde are reflected in financial statements). The shares also offer a c4.8% (and growing) dividend yield, highly attractive to those seeking income, in our view."--jh