Demand for London property from Asia-based investors has remained relatively stable despite uncertainty surrounding the global economy. This is due in part to the UK government’s announcement that a stamp duty surcharge of two percent for non-UK tax residents purchasing real estate in the UK will go into effect next April.
Many overseas investors are pushing ahead with buying decisions in order to complete transactions before the tax is enacted. And while the COVID-19 pandemic has altered the way people are conducting their property search, a flurry of activity is expected once the situation passes.
“Demand for London and UK real estate has not waned since Savills experienced a surge in sales in December 2019 and January 2020. Our webinars globally are fully subscribed each week and I think now more than ever buyers are readying themselves to transact as soon as global travel restrictions are lifted,” Chris Pratt, an agent at Savills, explained. “There is strong interest in stock complete developments as buyers look to purchase before the additional stamp duty charge of two percent comes in from April 2021.”
Investors based in Asia may not be able to close property transactions just yet, but that hasn’t dampened demand for London property in the region.
“We are seeing Mainland Chinese and Hong Kong nationals driving the majority of the international interest. Other markets who are currently still in lockdown, such as Singapore, Malaysia, Thailand and the Middle East, are using this time to research the market and carry out their due diligence,” Pratt noted.
Many UK property professionals have noticed a correlation between the status of a country and where investors are in the buying process. When a country exits lockdown, buyers quickly make enquiries having already completed the information gathering phase.
“We are currently seeing an upsurge in enquiries from the Asia. We’ve found that buyers in territories which have now relaxed lockdown restrictions like China and Hong Kong have returned to the market and this is where enquiries are coming from,” James Lane, Head Of Sales at Capco, stated. “Many of these investors were already considering London as an investment proposition so the virus sought only to pause their interest for a time, while others attune to the ebbs and flows of sterling are now looking to see how they could potentially benefit from currency fluctuations.”
Capco has been offering video conference calls to accompany virtual tours which Lane proclaimed have been very popular with clients overseas.
“With travel restrictions, our agents are still able to show buyers what their new home will look like as well as the proximity to nearby universities, famous landmarks and transport hubs on interactive maps which is key to them making a decision,” Lane said.
What are buyers looking for in London?
According to Lane, Chinese buyers are looking for investment opportunities but are also thinking about education opportunities abroad. This has led to strong demand for London property in the city’s prime areas.
“Overall, we have found that enquiries are still coming in as investors are attracted to the traditional and low rise residential area of Fulham, the proximity to schools and universities but also during this time hospitals; there are some excellent medical facilities on the doorstep and we expect this to form part of the sales conversation going forward in a way that wasn’t so obvious before,” Lane explained.
One project that has seen a lot of interest among overseas property investors is Lillie Square. The development’s first phase is completed and move-in ready with the next phase set to launch shortly.
“Due to where we are in the build phase at Lillie Square we are also in a good position to appeal to investors who want to purchase an apartment which is already completed and ready to move into,” Lane noted. “Buyers have peace of mind that their home won’t be delayed should there be new guidance from the government on social distancing for construction.”
Despite some challenges, there haven’t be any major shifts when it comes to demand for London property. In fact, the only real change in international buying preferences is in regard to location, but even that has been relatively minor.
“There are investors looking for big discounts, but no more than usual. We have seen a slight shift to the prime locations that offer familiarity to an international buyer,” Pratt said. “Demand is as high as its been for four years, however transactions are lower due to the logistics of making a purchase during a lockdown.”