Interest from Asian investors up; European stay away
Asian investors opt in...
One of India’s largest property developers, currently expanding their London presence, says the London market has been “quite good”, and still a viable option for outside and domestic investors.
The Lodha Group is a giant in the Indian market, but a relative newcomer to London, where they’ve been developing property for four years.
Managing Director Abhishek Lodha said the group honed in on London due to its potential. "We felt it was a market which has sizable scale, had an absence of very large-scale developers and where one could do high quality development. The price points were there to support the high quality of development."
One factor propping up property sales is the depreciation of the pound, Lodha said. And although property volumes have declined due to political uncertainty, analysts say London is still a safe haven for foreign investors.
"The overall attractiveness of London as a city, as well as the resilience of the UK economy, has really surprised a lot of us," he added.
...while Europeans opt out
Meanwhile buyers from continental Europe are staying away. Continental European buyers, who formerly favoured property in exclusive Chelsea and Kensington, are no longer the largest group of overseas buyers.
In the first quarter of 2017, these homeowners made up just 8% of buyers, a dramatic drop from 28% last year.
Real estate agents Hamptons International reported the drop, saying that the fall in European interest coincided with a fall in transaction numbers in the prime central London market.
Hamptons’ residential research director said some buyers might have brought their purchases forward last year, to take advantage of the pound’s dip against the euro.
“There may be some backlash after that — but also there is a lot of uncertainty in Britain at the moment and in the prime central London market,” she said. “We may see more activity when things are more settled with Brexit and that may affect [buyers from] the EU more than elsewhere.”
A spokesperson from the buying agency Property Vision said changes have been pronounced.
“We’ve had many years of seeing hordes of French people moving here, Italians wanting their pied-à-terre here, and so on. That has changed pretty dramatically,” said Roarie Scarisbrick. “We are still seeing some French, Italians and Germans buying here but it is a significantly reduced pool of buyers. Those that are buying really need to buy something — they have practical reasons.”
Europeans also sold up in greater numbers last year, making up 37% of sellers in the third quarter of 2016. This included European residents in London as well as investment property owners.
Meanwhile, the number of property buyers from the Middle East has surged, thanks to an oil price recovery and the low pound against the dollar in the wake of last year’s Brexit referendum. Buyers from the Middle East made up 10% of home buyers in central London in the first three months of the year.
Russians are also coming back after a period of absence that analysts say is due to a weak rouble and lower oil prices.
Despite the renewed interest from some quarters, demand for high-end London property is low, affected by falling prices and changes to stamp duty. Prices in central London have dropped 12.5% since peaking in 2014, and the transactions are down by around 30% over last year.