Overseas buyers snap up majority of exclusive London homes
Proportion of foreign investors targeting high-end postcodes at 5-year high
Overseas investors snapped up more than half of all properties for sale in London’s most exclusive postcodes in the last half of 2017 as buyers took advantage of big discounts in areas such as Belgravia and Kensington. The proportion of homes in the capital’s “prime central” spots bought by foreign investors hit the highest level in five years, with a significant jump in Middle Eastern buyers boosting the figures, according to Hamptons International.
The rise in international buyers follows new figures showing that high-end homes in central London are selling at the biggest discounts to asking price in more than a decade. Prices per square foot in prime London have fallen 5 per cent from their 2014 peak while in the most expensive “prime central” areas they are down 11 per cent, according to LonRes, a research company.
Across London more broadly, the proportion of homes sold to international buyers was around 30 per cent last year, according to Hamptons. The number of overseas buyers taking properties in the capital has come under increasing scrutiny from City Hall as housing in London rises up the political agenda. Sadiq Khan, mayor of London, last week said he would look at what measures he could offer to make sure Londoners got “first dibs” on newly built homes in the capital. It is likely that any action taken by Mr Khan would focus on newly built homes where he has more powers to grant or block planning permissions, rather than on the market for existing homes in areas such as Mayfair and Kensington.
Fionnuala Earley, a director at Hamptons International, said that despite prime central London properties taking “a bit of a bash” recently, “rarefied” addresses would always be sought after. While the number of international buyers declined in the immediate aftermath of the UK vote the leave the EU, the level quickly recovered as sterling weakness gave overseas buyers a favourable exchange rate. “In prime central London, there’s a feeling that it’s relatively cheap to buy in London for non-sterling buyers,” said Ms Earley. Around a sixth of prime central homes changing hands in the second half of 2017 were bought by Middle Eastern investors, up from 5 per cent in the first half.
European buyers have been a decreasing proportion of the total sales figures since the EU referendum, dropping from nearly a quarter in the first half of 2016 to a tenth in 2017. European buyers also withdrew from outer areas of the capital, and now represent buyers on only 4 per cent of homes sales, compared with more than 10 per cent before the referendum. “In Europe, there’s a greater feeling about what Brexit might do than there is in other parts of world,” said Ms Earley.