With flights grounded and uncertainty hanging over the global economy, it would be easy to think that foreign buyers have paused their activities in London’s property market.
Yet despite the fallout from the Covid-19 pandemic, deals are still being done. As a buying agent for overseas investors, we’ve exchanged on several prime residential properties and a commercial unit in the capital since the lockdown was introduced.
Like many businesses, my team at PSS London – a property consultancy firm dedicated to securing both residential and commercial opportunities – has had to close its offices in London and Istanbul during this period. But we have made the most out of a tricky situation by attending industry webinars and running Zoom meetings between clients, solicitors and bankers.
Since Britain entered lockdown, we have been hitting the phones every day to give our clients market updates and to keep them informed about the London property market, both in terms of its housing market and its commercial one. Given many of my clients are thousands of miles away and unable to travel to London any time soon, feeding them the right information and keeping their trust has been more important than ever before.
Even with all the current unknowns, if clients trust you and know you are bringing them a good deal, they are often happy to press ahead with their plans
Even with all the current unknowns, if clients trust you and know you are bringing them a good deal, then they are often happy to press ahead with their plans.
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In fact, we think that this period is a great time to negotiate a deal. Buyers that we are advising now have the full attention of many developers that are bringing new-build homes to market. Before this crisis, many senior management teams were too busy to fit in meetings with clients, but we can often get them involved now as they have more time and everybody is desperate to do some deal-making.
Looking forward, in the residential market I think there will be a ‘discovery’ stage where both buyers and sellers will wait and collect more information before working out where they stand on pricing.
In recent years, we’ve completed some blockbuster deals in London’s residential market, from units at One Tower Bridge to apartments at 199 The Knightsbridge.
I believe this fundamental demand we have seen in the past is not going away. Buyers remain financially buoyant and there will be a real eagerness to snatch up a great investment opportunity.
As an agency business that looks after overseas investors, our position will remain the same over the coming three to four months: we will continue to actively promote deals remotely until international flights operate as normal and the universities are fully open in the UK.
It is not just the residential markets where there are bargains to be found. One of the biggest opportunities coming out of this crisis will be in London’s commercial property sector. We are expecting investment volumes in this space to fall to the kind of levels that we have not seen since the financial crash of 2008.
However, there will be fewer corporate buyers on the market, and this will create good opportunities for individual buyers and family offices. Clients will not need to compete against as many pension funds when trying to buy assets and there will be more time to digest and analyse the commercial deals coming through the process.
Sectors that were under pressure prior to the current crisis will remain under pressure, and we do expect to see more bank-led sales of retail assets as distress on the high street continues to mount.
Having in-depth expertise in the UK’s commercial property market is crucial, especially as values at the moment are difficult to determine. We are regularly updating our clients with new listings that have the potential to generate high returns on investment, whether small retail units or larger mixed-use blocks.
In 2012, we acted for a private investor who snapped up a trophy virtual freehold retail unit at London’s exclusive One Hyde Park development (pictured). This was resold in 2019 with a healthy profit. We’ve also acted on two large commercial deals in nearby Mayfair, both for circa £40m, in 2017 and 2018 respectively. These sorts of deals don’t come around every day, but with London still viewed as one of the world’s safest and most popular cities, we’re expecting famed districts such as Knightsbridge to keep their commercial prestige in spite of the current volatility.
It has undoubtedly been a tough few months for real estate. But we should not forget that the lockdown was introduced shortly after the news that Britain was definitely leaving the EU following the government’s decisive election victory. The election result meant we were all hoping for and expecting a good recovery in the property sector.
Unfortunately, this pick-up didn’t really happen, and just as we hoped for activity to return to the market, the Covid-19 pandemic disrupted all parts of the global economy. But after almost four years of Brexit-related uncertainty, many buyers and sellers are fed up of sitting on the fence. Lots of them are already near to closing deals and securing opportunities. It is still going to be a time-consuming process, but the motivation is there.
Information is everything. As the UK government gradually starts to ease lockdown measures, overseas investors will need to be kept in the loop when it comes to mortgage consultation, legal guidance, immigration rules and the general market outlook. Buying agents such as myself will look to use our experience and insight as much as we can.
Despite all the difficulties of the past few months, we at PSS London are coming out of this period with a positive outlook. For overseas investors, London’s fundamentals are as strong as they always have been, whether it’s the education system, the rule of law or even the open green spaces across the capital. There has never been a better time for buyers and their agents to search for new opportunities.
By Emre Bilgin
Source: Property Week