While most of the UK is still yet to recover to their 2007 peak, London is well above the national average and central locations have even exceeded those 2007 highs.
It is now well recognised that London is one of the prominent locations for overseas investment. CBRE, the world’s largest property agent, ranked the British capital first in a list of most attractive investment locations for a second year running.
New build property in Central London, in particular, is a magnet for foreign money: it is estimated that last year 60% of new builds were bought by overseas investors. Far Eastern buyers have been investing in London property for well over 20 years, but it is the prime London market that is generating the most amount of interest. It is estimated that half of properties priced at £2 million or more are snapped up by international buyers.
Not only that, 70% of properties priced at £10 million or more are purchased by international buyers, with investment coming from the Far East, Russia and the Middle East. Due to this ever-increasing foreign interest in London’s prime market, prime London property has experienced a 57% value increase over the past 4 years. The prime London market is not expected to slow down anytime soon: prices are predicted to increase by 26% by 2018.
This targeting of the higher end of the market, typically in higher value boroughs, has had a knock on effect on lower value properties. Overseas investors focus on properties between £400,000 - £1 million and this can often lead to domestic purchasers being displaced by foreign investors, inevitably leading them to “cash in” or to acquire property in boroughs that are adjacent to prime Boroughs in London. This leads to price rises in these locations, causing what has been referred to as the London housing “domino effect”
London is seen as a sound investment in times of economic uncertainty. Increasingly, international investment is coming from other European countries as concerns over the stability of the Eurozone are driving wealthy Europeans to place their money in a safe investment. Far Eastern buyers have long been attracted by the cache of owning a piece of London, and the sterling deposit in a British bank, should they chose to sell.
The rising cost of property in the capital is also down to a critical shortage of market availability. The number of unsold homes on the London property market is now 30% less than in 2007: pushing up competition and prices.
London property has become the ultimate safe haven investment for foreign nationals. A world class Capital supported by strong international banks, a world renowned legal system in tandem with the world’s oldest democracy, not to mention London’s iconic cultural status.
London it seems, has it all.
This guest blog was provided by Madeline Flower, Marketing Director at the leading property investment and development company, Galliard Homes.