Overseas buyers rush to cash in on London property

After the uncertainty of Brexit slowing the property market, and the ever-weakening pound, London’s prestigious properties have become an enticing investment opportunity for millionaire buyers overseas, according to a new report.

The annual Ultra Prime Barometer Report states foreign investors in London are getting discounts of around 10 per cent on prime real estate in London since the UK voted to leave the EU.

London Shard

Buyers from the Middle East, the US and India are expected to start taking advantage of the drop by lapping up London’s most exclusive homes. The new wave of foreign investors are expected to purchase properties on the market for £5m and up in some of the most sought after areas.

The report shows that the average price of an ultra-prime residence in Mayfair in 2015 was US$5,306 per square foot, which by 2016 dropped by 10.6 per cent to $4,741 per square foot.

This suggests that an investor buying an average 4,000 square foot property in Mayfair now pays $18.9m, instead of $21m in 2015 – saving a mammoth $2.2m. In sterling, the same sized home would cost £15m, instead of £14.6m in 2015.

In the Middle East, most countries (UAE, Jordan, Saudi Arabia, the Oman, Qatar, Lebanon and Bahrain) trade in US Dollars. The 10.6 per cent drop in London house prices for investors trading in US Dollars has had a major influence on the amount of sales of prime residential and investment properties in London.

London skyline

Property enquiries from the Middle East have risen by 15 per cent in the past six month, with property sales rising by 10 per cent. The report also suggested that enquiries from the US had risen 10 per cent in for the same period, and sales increased by 10 per cent. Indian enquiries from the UAE went up by 10 per cent and actual sales by five per cent.

In comparison, the number of British millionaires enquiring about purchasing high-end real estate in the prestigious areas of Manhattan has fallen "considerably", the report said.

“At the start of 2017 both New York and London have witnessed huge political changes - Brexit in the UK and the Trump Presidential win in the USA," said Jed Garfield of estate agency Leslie J Garfield.

"These two political events are game-changers that will trigger major economic, trade and taxation policies that will shape the destiny of both London and Manhattan for many years to come.

"The cities have huge cultural crossovers and if Trump and May start even closer economic ties and reduce tariffs to zero then the level of cross-investments between the two cities is likely to spiral significantly.”

Property prices in London have been sluggish over the past six months; prices in the most ultra-prime areas have struggled to recover from the slump since Brexit last summer.

Overall, prime central London property prices fell by 6.7 per cent in January, and prices fell 13 per cent in Chelsea and 4.4 per cent in Mayfair.

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