There is an increasing demand from a widening range of overseas buyers for property in London with those from Asia, the most active. London has long been considered an attractive destination for international investors and they spent £2.2 billion on new property in the city in 2012, according to new research from Knight Frank.
It reveals the size of overseas investment into the London new build sector and examines how the financial crisis has changed the dynamics of the market and analyses who is buying new build property and why.
‘International interest in London property is not a new phenomenon, but the economic and financial changes since 2007 have created a fresh model for overseas investment in new build property,’ said Gráinne Gilmore, head of UK residential research at Knight Frank. ‘Agents report that the appetite for London property remains strong, and there is an increasing interest in London property from a widening range of overseas buyers, especially some emerging economies where economic growth has remained robust during the downturn,’ she explained.
A total of 52 nationalities bought new build property in central London last year. Buyers from Singapore were the most active overseas buyers, ranked by number of transactions, with 22% of sales. Hong Kong buyers accounted for 16% of sales followed by Chinese at 5%, Malaysians 4% and Russians 3%.
The report points out that the crisis in the Eurozone has only boosted interest in London bricks and mortar among Europeans. There was a sharp rise in buyers from Italy, France and Spain in late 2011 and early 2012 as investors looked for ways to diversify away from Euro-denominated assets. A weaker pound served to make the opportunity even more attractive.
Quote from PropertyCommunity.com : “Most regions in the UK saw annual property price falls in third quarter of 2012 but London has performed the best with values just 2% below peak.”
Education is also a major consideration with a third of investors buying off plan property with their children’s education in mind, planning to use at least one property for their children to live while they attend a London university. ‘The lure of world renowned schools and universities in and around London cannot be overstated. In many cases, the property or properties will be used by their offspring while they study at a university, and then rented out once the child or children move elsewhere or return home. If the children are not yet at the correct age for university, the property may be rented out until they are,’ said Gilmore.
The report also says that China and Indonesia are among the biggest potential new markets for UK property investment from 2013 and London attracts international attention because it is such a multi-national city.
There are large overseas communities living in the UK capital with the number of Europeans living in London far outnumbering the total population of Frankfurt, while the number of French nationals living in London rivals the population of Cannes. The diversity of London’s population is reflected everywhere, for example the foundation of French Lycée schools in South Kensington and Clapham, areas popular with French families. Indeed, in 2012 Knight Frank lettings agents rented out properties to tenants of 77 different nationalities.