London residential real estate appeal skyrockets for international buyers

Created: 28 Feb 2023

The UK’s residential property market has long been a popular location for international investment, with market conditions ripe for cash buyers to outperform over the long term. Hong Kong residents and investors, experiencing a property market slump at home, are upscaling British focused real estate capital allocations given its legacy of stable, profitable returns alongside favourable exchange rates from Hong Kong Dollars to British Sterling.

A key driver of Hong Kong based interest has been the BNO passport scheme, which provides a fast-track to British citizenship for any citizens, and was introduced in 2021. Furthermore, the rental market has stalled since the advent of social unrest, Covid-19, and geo-political shocks from mainland China leading luxury home rents to correct aggressively, with as much as a 3 per cent decline expected this year, according to Knight Frank.

Simultaneously the UK’s rental market has skyrocketed, with demand exceeding supply, leading to higher rental prices. Moreover, whilst capital appreciation has stalled across the country it continues to compound in London. Rightmove indicates the average UK home is £362,452, with a 0.9 per cent increase from December to January worth £3,301, slowing to a £14 increase in January. In London, the Rightmove data shows a 2.1 per cent rise in asking prices to £680,000, going up to 17 per cent annually in boroughs such as Camden.

The latest Aldermore Bank’s buy-to-let (BTL) city tracker has ranked Manchester, London, and Luton amongst the top ten BTL investment locations for 2023 owing to long-term property growth prospects, tenancy demand, and infrastructure access. As a global financial hub which celebrates a diverse population, offering world-class amenities, the residential investment in the capital presents exciting investment opportunities for international buyers.

“Demand from Hong Kong is causing lenders to create specific deals for Hong Kong buyers in a bid to win business from a lucrative sector. These products are available for both residential and buy-to-let properties on new purchases and re-mortgages […] offering impressive rates compared to average mortgage products. The range of available Hong Kong-specific products is also likely to keep growing with data showing that a quarter of Hong Kong citizens under 35 are planning to move overseas to work.” Stuart Marshall of Liquid Expat Mortgages

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