A snapshot: International buyers and property for sale in Central London

Investing in property, particularly in London, is still an attractive proposition among foreign nationals when compared with other investment options. In fact, the return on some Central London property is outperforming stocks, shares, pensions, gold and fine art.

There was a pause in the action earlier in 2015 when the world’s property elite and Central London estate agents held their breath for the general election result but the touted mansion tax applicable to £2 million plus homes, along with a Labour win, never emerged. Therefore, the purchase of Central London property for sale by international buyers resumed.

Why do international buyers choose property for sale in Central London?

London is a global city and is a good place to invest for the following reasons*:

• The UK has a benign and stable political environment that is broadly supportive of inward investment.
• There are no legal restrictions on property ownership by overseas parties.
• The UK economy has recovered well after the recessions and is not perceived to be subject to the same Euro-zone related risks as other European countries.
• The UK housing market has a well-publicised history of price growth in the long term.
• The Pound remains a stable currency.
• London is the figurehead of the UK economy and a global finance centre.
• Many investors from developed overseas centres have either lived in London themselves for a period or have friends and relatives working in the capital.

(*British Property Federation 2014)

Motivation: why are international buyers purchasing?

Properties purchased by overseas buyers tend to be for the following reasons:

• Many are bought specifically as a buy-to-let investment, to be held for a number of years following completion.
• Others are bought to provide the buyer with a London base - either as holiday home or to be used on business trips.
• The relocation market fuels a big part of the international home moving scene, with many individuals and families moving to London for work.
• A significant number of Central London properties are bought to accommodate offspring studying or working in London.

Where do international buyers favour in London?

The influence of overseas buyers is clearly greatest within the £1 million plus property bracket and the upmarket boroughs in Central London are most favoured. According to Land Registry data from February 2012, the top ten boroughs where overseas individuals owned property were, in order:-

• City of Westminster
• Kensington and Chelsea
• Camden
• Wandsworth
• Lambeth
• Tower Hamlets
• Hammersmith and Fulham
• Hounslow
• Barnet
• City of London

A common perception is that the majority of overseas sales are made in Asia, particularly in Hong Kong and Singapore. Although exact percentages vary, Asian investors do dominate, particularly in the price bands between £700 and £1,500 per square foot, although significant numbers of acquisitions are by buyers in Europe, the Middle East, Russia and neighbouring states, and North America. It has been estimated that some 64 different nationalities invest in London (Financial Times, 2012) and the makeup of buyers is highly dependent on financial and political events across the globe.

Brand new homes: favoured by the global buyer

In 2011, Drivers Jonas Deloitte reported that the sale of over 60% of brand new properties in Central London could be attributed to overseas investors - a figure we suspect has risen since the report was issued. While there is often conflict over whether overseas investors push prices up too high, overseas investment really aids the UK economy during economic dips. New build developments in London have been marketed overseas for a long time and now many UK house builders have a presence on a number of continents, particularly in Asia.

While offering new homes to overseas buyers first is controversial, the finance raised from selling off plan at an international level regularly raises the finance required to get many projects started, which not only helps the wider house building industry in the UK but also the construction workforce as well.

Providing pace and prosper to the London market

Daniel Epstein, one of the partners at TK International comments: “Global home movers and property investors are, and always have been, an integral part of the Central London property market. Rather than cause an imbalance, they tend to make the market ‘tick’, especially if our home-grown economy is experiencing a blip. At TK International we welcome buyers from across the world as we see the positive effect their interaction has on the prime property market here in Central London.”

If you would like advice on properties for sale in Hampstead and the surrounding Central London areas, please contact TK International today.