More Asian investors buy homes in London

LONDON: The United Kingdom is seeing a higher number of overseas investors from Asia buying homes in London. They accounted for 15% of purchases in the capital or 80% in prime central London in 2013, according to a report by the British Property Federation.

The report also found that of the 61% properties purchased, 48% were rented out, 3% were bought by owner-occupiers, 5% were for investors to sell, and 8% were built to rent.

Hong Kong-based Direct Property Group joint managing director Ian Brand said investors across the globe, especially from Asia, have an appetite for London’s property market.

“We’ve noted a surge in interest in the past few years, mainly due to beneficial exchange rates. Prime central London’s real estate is regarded as relatively safe and secure, which is attractive to buyers and the 2012 Olympics in London had obviously fuelled demand.

“Its education system, vibrant culture and an ethnically diverse population are cited time and time again as reasons for investing there,” he said.

Investors are paying an average of £1.45 million (RM7.91 million) for central London properties. “It is expected that London property prices will leap a staggering 43.5% by 2018,” said Brand.

Although London’s home market continues to drive residents out due to property prices rising 60% since 2009, overseas property investment is still a valuable income for many in Asia.

“Buy-to-let allows some investors to take a yield, while others buy more for capital appreciation. And the spotlight is firmly on London at the moment. The strength of the Singapore dollar in the last two years means that London has looked significantly cheaper,” said Brand.

Furthermore, he said the volatility of markets in Asia is driving people to Europe and London in particular. Hong Kong and Singapore’s housing markets saw prices plummet 56% and 72% respectively in one year during the recession, compared with 11% in prime central London.

This article first appeared in The Edge Financial Daily, on March 28, 2014.

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