Record foreign buyers for London properties

KUALA LUMPUR: A record 61 nationalities bought property in London in the 12 months to end-February, according to Knight Frank’s Prime Central London Index for February 2011.

Knight Frank LLP Residential Research head Liam Bailey said Spanish buyers accounted for the highest sales volume with a 340% growth in the past 12 months to February 2011, followed by buyers from Uzbekistan with an increase of 320% in the same period. This was closely followed by buyers from Hong Kong (310%), the US (225%), Greece (175%), Australia (150%) and Iran (150%).

Malaysia came next with an annual increase of 150% in buyer volume, followed by Nigeria (125%) and Taiwan (100%).

Also on the list of top foreign buyers in London were China, France, India, Russia and the United Arab Emirates (UAE), with an increase of 80%, 40%, 33%, 24% and 10% respectively.

The growing demand for London property from international buyers has also driven price growth, a divergence from national trends. The index revealed that prices of property in prime areas across London rose 1% in February from the preceding month, contributing to an annual growth of 8%.

The London-based property consultant reported that prices have risen 24% since the post-credit crunch low in March 2009 although it is still 2% lower than the peak level in March 2008.

“Prices slipped in London during the summer and autumn last year, which fitted the wider narrative of a weakening UK economy and a weaker national housing market,” Bailey said, adding that prices have since resumed their recovery and in the four months to the end of February, had risen by 4%.

The price growth can be partially ascribed to low stock volumes and a desire from buyers over recent months to buy and fix their borrowing costs at very low rates.

“However, the most important factor driving price growth has been growing demand for London property from international buyers. Over the last 12 months the proportion of sales valued at over £2 million (RM9.9 million) which went to non-UK buyers hit 52%. For sales above £5 million, the figure was 64%,” said Bailey.

According to him, the number of different nationalities who are buying in London has risen from 46 in 2009 to a record of 61 over the past year.

“Looking at our top 15 fastest growing international buyers by market share, we can see several trends at play. Eurozone concerns appear to have pushed buyers from Spain, Greece and France into first, fifth and 12th places respectively,” Bailey said.

Wealth generation from the mining and commodity sectors has propelled demand from Uzbekistan, Australia, Nigeria and Russia, while Asian economic growth fuelled demand from Hong Kong, Malaysia, Taiwan, China and India.

“Looking ahead at how these trends will change over time, London’s leading wealth managers and private bankers recently confirmed in our Super-Prime London Survey that the 10 nationalities most likely to grow their share of purchases in the central London market over the next 12 months are: Russian, Chinese, Indian, UAE, other Middle Easterns, Egyptian, Italian, Lebanese, Turkish and Brazilian,” he added.

This article appeared on the Property page, The Edge Financial Daily, March 4, 2011.

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