International buyers target London real estate

Created: 05 May 2022

Domestic investment in the UK capital’s property market is up sharply with  people returning to the office and second home ownership rising. This is being matched or exceeded by international investment  into London residential property from Hong Kong and Singapore for example, intent on securing prime and super prime real estate in a competitive landscape. 

Whilst local home buyers are typically forced to wait to sell their  homes in order to fund the purchase of a new one; foreign property buyers are returning to the market with financial resources immediately available to deploy. This has the effect of both raising competitive pricing of stock as well as reducing supply in housing stock, with less old homes being recycled into the system by home movers and second steppers. 

Fiscal measures such as the introduction of the London British National Overseas visa scheme have  heightened interest from Hong Kong  buyers. Since its launch in 2021, over 103,900 have applied for UK relocation, with 93 per cent being approved. In view of the 2.9 million now able to undertake this process, it is estimated that approximately 322,400 Hong Kong expatriates may buy UK’s residential property leading up to 2026. 

Distance from London has been identified as a key factor determining the price of a property across England and Wales. The ONS examined pre-pandemic data and concluded that, for towns within 200km of the capital, every 50km away from London was equivalent to a £50,000 reduction in price. The next most important factor included the types of local jobs available and the number of people employed in high skill level jobs. 

What this research doesn’t take into account is the evolving nature of the housing market. In using pre-pandemic data to mitigate the impact of volatility on findings, the research misses key trends such as the race for space and flexible home working. Singapore investors  are increasingly prevalent in the London market, with Beauchamp Estates citing a 40 per cent annual increase in enquiries. Key priorities such as education are driving demand for family housing within this demographic.   

“Strutt & Parker forecasts prime central London house prices will grow by up to 10% in 2022 amid strong demand and “ongoing supply constraints.” It estimates price growth in the U.K. will reach between 20% and 30% over the next five years, with a 20% to 35% estimate for prime central London.”