Developments in London have been marketed overseas for a long time, and there has long been a trend for overseas buyers to purchase homes or investment properties in UK capital, London. In the 1980s, USA buyers dominated the international market, as did those from the Middle East.
Over the last decade or so, more Asian buyers are eyeing property investment opportunities in Greater London to add to their property portfolios.
Buying enquiries from China for residential property in the UK more than tripled in the first half of this year, with Manchester, Liverpool, Birmingham and Edinburgh experiencing the highest growth in 2019. Within the UK, London ranked the highest place for investment, followed by Manchester, Birmingham and Liverpool.
(According to Investor news report)
Two leading developers, the Berkeley Group and Baratt Homes, have decided to expand their branches and offices in Hong Kong and Beijing respectively. Additionally, most developers and property agencies decided to set up a China desk team to take a pro-active approach to market UK properties to Asian buyers.
A few factors worth knowing about overseas buyers from Asia:
- China is among the biggest potential new markets for UK property investment from 2013, almost one in ten sales were to Chinese clients.
- Buyers from Singapore and Hong Kong accounted for 40% of purchasers of new-build property in central London.
- By average investment per property, Singapore and Hong Kong still top the charts, the typical purchase price for new-build property in prime central London among Asian buyers stands at around £680,000.
- 2% of the Asian buyers in 2019 purchased their property to use as a second home, with 65% instead intending to rent them out, and 33% purchasing them as homes for children attending university in London.
- Investors prefer properties based in zones 1 or 2, and ideally in close proximity to a tube station.
- Schemes close to river are also popular, as well as regeneration schemes which guarantee that the public realm surrounding the property will be attractive and well maintained.
- According to Knight Frank, some overseas buyers, especially Chinese buyers, are more comfortable with the idea of buying a property off-plan, as this practice more closely reflects the property market in their own countries.
- In contrast, Hong Kong buyers are often keen to visit the UK themselves before purchasing, rather than doing so off-plan.
UKLEJU shortlisted the following reasons to explain why London property appeals so much to the Asian buyers:
People often called London property market a “safe haven.”
What does this mean? The UK economy has suffered during the western recession but it not perceived to be subject to the same Euro-zone related risks as other European countries. There might be risks that could threaten the current buoyancy of the overseas demand for prime London property, but there is no evidence that the city’s reputation as a safe-haven is at risk.
Transparent property market
On a pure investment basis, property tenure is clear cut and underpinned by the legal system. The UK has a stable political environment that is broadly supportive of investment from outside. There are no legal restrictions on property ownership by overseas parties. The country itself is physically and politically safe. There is clear rule of law and transparency in the political system that is not replicated in some emerging economies.
Stable global financial centre
London is still the figure head of the global economy. Many Chinese investments include stakes in Thames Water, Heathrow and Manchester airports, London’s tallest building and British companies such as Weetabix, Pizza Express, and Sun seekers, not to forget two Premier League football clubs — Southampton FC and West Bromwich Albion. Huawei, a controversial Chinese telecommunication infrastructure company is now a major supplier to British Telecom and employs about 1.000 staff. The list goes on.
Parents from overseas are buying up houses as a base for their children to live during their study time in UK. In other way, they purchase the property for self-use while visiting their sons and daughters during school term time. The families are mostly from Hong Kong, mainland China and Russia, a survey by estate agent Knight Frank found.
The fall of GBP
The pounds fell against many other currencies in the immediate aftermath of the economic crisis, and remain weak, offering overseas buyers an effective discount on purchasing property in London and the rest of UK. Forecast show that the pound is likely to remain relatively weak in the years to come due to Brexit.
Supportive finance resources
The Bank of China is also offering mortgages in sterling to Chinese investors. This option makes it easier for the buying process, as only the bank from the UK branches can conduct screening tests for UK property mortgages. In order for the overseas buyers to meet the bank’s mortgage criteria, international banks based in UK can provide huge support during the buying process.
But is this trend here to stay?
This trend had an important impact on the property market in London, allowing developers to secure funding to develop schemes in a housing market largely starved of development finance.
As a bilingual (English and Chinese) online property portal, UKLEJU had an exceptional track record of connecting UK agents and property developers with Chinese investors. Our mission is to bridge the cultural gap between China, the UK and the rest of Asia. Through our platform, we managed to reach out to a diverse range of global audiences. Our most recent 2019 website traffic is shown below:
In the coming years, China investor is tipped to become a strong player in the London property market, whereas Hong Kong and Singapore have often hailed as an emerging market in terms of buyers of prime London homes. Therefore, we expect the core Asian markets to remain strong, especially for the popular developments in the prime locations in London.
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