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Foreign buyers - Camilla Dell

Foreign buyers: A blessing for the prime London market

There may be potential storm clouds gathering over the broader domestic housing market, with fears of a ‘double-dip’ situation on the horizon. But whilst we don’t expect the prime Central London market to remain completely immune, thanks to certain unique long-term supports, we do expect it to weather any storm.

One of the primary long-term supports that has kept the market relatively buoyant during the economic turmoil of recent years, is the demand from foreign buyers for prime Central London property. Indeed, according to a recent survey, over two thirds of buyers over the £5million mark in London during the month of June, came from overseas. The demand/supply ratio in central London has been and continues to be completely different to the mainstream housing market for this very reason.

Although the weak sterling certainly proved to attract increased numbers of overseas investors to London during the recession, the long-standing view of the prime London property market as a safe haven for investment continues to be the driving factor, and the increasing interest from overseas buyers looks set to be a long-term theme.

At Black Brick, our client base continues to broaden and diversify geographically. We currently have clients from Nigeria, Malaysia, Singapore, Turkey, Cyprus, India, Bahrain, Kuwait, Australia and Greece among other countries. India and the rest of Asia are particular hotspots at the moment in terms of expressions of interest – reflecting the area’s fast-growing high net worth contingent and strong historical links with the UK.

There are other factors that make London so appealing – the enduring attractions of London’s excellent schools to the international elite should not be underestimated. The relatively light regulatory burden on companies wishing to gain a public listing in London compared to New York means that London is the stock market of choice for many international corporates seeking capital. Meanwhile London’s geographic position enables access to Asian markets in the morning UK-time and American markets in the afternoon and evening – an important factor for many companies. Taken together we believe these factors will continue to provide material support for prime central London property prices for the foreseeable future.

Interestingly, most overseas buyers are currently not interested in prime central London property as a short-term investment. Rather, many view the purchase of property here as no investment at all as they have no intention of selling. Property here is viewed as a long-term asset that will stay in the family for generations to come. As a result the normal buying patterns that drive the market are largely irrelevant. An increasing percentage of potential stock for sale is therefore removed from the market in perpetuity with every month that passes – compounding the issue of short supply.

There is an argument that heightened risk-aversion among high net worth investors only increases the attractions of prime central London as a relative safe-haven, so if we are indeed in for a ‘double dip’ downturn, this could be a blessing in disguise for the prime London property market.

Camilla Dell

Camilla Dell is Managing Partner of Black Brick Property Solutions. Black Brick is London’s leading independent buying consultancy, acting exclusively on behalf of buyers to source and secure the best property at the right price.

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