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Global investors, including those emigrating from Hong Kong, are flocking back to London’s prime areas to snap up properties as the world gradually moves on to living with Covid-19.

Several districts in London are recording higher property sales in recent months, according to real estate agents as workers return to their offices amid easier travel rules and a top health official said the city may have seen the peak of the Omicron wave.

Transactions have increased by 4.1 per cent per month on average across the capital over the last one year, according to Bective, a London-based property agency. Sales in the firm’s prime central London offices have also gained by 24 per cent on average.

“There are signs that momentum is starting to build,” said Marc von Grundherr, director of Benham and Reeves.

The green shoots of recovery are showing after the industry was battered by months of upheavals since the pandemic broke out in early 2020, slamming demand from foreign investors. Office workers, enabled by flexible working arrangements, opted for properties outside the capital for their bigger spaces.

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Hong Kong-based buyers, including those moving to the UK under the British National (Overseas) visa scheme, are likely to be among the most active investors. As many as 322,400 of these emigrants are likely to buy homes in the next five years, the UK government estimates.

As of the third quarter of 2021, about 88,900 Hongkongers had applied for the visa scheme since its introduction in January, of which 76,176 had been approved, according to official data. The scheme, which offers an easier path to citizenship, was London’s response to Beijing’s imposition of a national security law in June 2021.

“Prime central London has always been a destination of choice for foreign buyers, Hongkongers included,” von Grundherr said. “Many of those that are migrating with the help of the BNO visa scheme are doing so at slightly lower price thresholds.”

Hong Kong buyers typically fork out around £700,000 (US$947,000) to £800,000 for their UK homes, he added. They tend to gravitate toward the Highgate and Hampstead areas in the northern part of London, which offer a greater choice of large family homes, schools and an established Hong Kong community, according to von Grundherr.

The upscale districts of Kensington and Chelsea in central London are also popular among Hong Kong-based buyers, who make up 42 per cent of the active clients at London Central Portfolio, according to Andrew Weir, its chief executive.

“We recently acquired a pied-à-terre in Chelsea, close to the river with off-street parking, on behalf of a Hong Kong client,” he added. “We also have Hong Kong clients looking for family-sized homes,” he said, including one who already owns London properties and plans to retire to the city permanently.

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To be sure, the public health crisis is far from over. While prime central London values have risen and activity levels have picked up significantly in recent months, the Omicron variant is likely to delay the market recovery, according to Frances Clacy, research analyst at Savills.

“The renewed Covid-19 uncertainty adds an unwelcome additional layer of doubt that is likely to push the expected bounce in values further into 2022,” she said. “We believe it’s a question of when, and not if, prices rebound, particularly as more pent-up demand builds.”

Britain recorded 141,472 new cases on Sunday, versus 146,390 on Saturday, according to official data, while the number of new deaths fell to 97 from 313.

Last week, the British government said fully vaccinated travellers will no longer be required to take a pre-departure test before arriving in the country. Meanwhile, London “may well be past the peak,” Kevin Fenton, London’s regional director for public health, said on Sunday, referring to the Omicron wave.

Prices in the London region rose 6.2 per cent in October from a year earlier, versus 2.8 per cent in September, the UK statistics office said last month. Despite rising at the slowest pace among nine regions, average house prices remain the most expensive at £516,000, it said.

By Cheryl Arcibal

Source: SCMP

Wealthy Chinese investors have long been reliable investors in the market, and have frequently looked to the UK, specifically London, as a stable and reliable point for investment.

Twice as many homes were sold in Central London for more than £15 million in 2021 as in 2020, the latest figures revealed, and it is anticipated that Russian and Chinese buyers will lead the way in the capital in 2022.

But, from a Chinese and Asian investment perspective, what is set to be the number one trend in the UK residential property market in 2022?

In a thought leadership article collated by 11K Consulting, a leading UK-based China-focused property PR agency, predictions have been made by eight China/Asian respected industry experts across the tax, legal, immigration, wealth management and property sales sectors.

We explore the main findings below.

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Education, education, education

It is predicted that in the aftermath of the pandemic, education will remain a key driver for Chinese and Asian buyers of UK residential property. Security is also becoming a priority, and there will be a continued increased use of digital tools for property viewing with the ongoing global travel restrictions caused by Covid.

Rafael Steinmetz Leffa, executive director of GWM, said: “From clients based in mainland China, the main trend I have witnessed is an actual willingness to move to the UK. There has been an educational reform causing challenges in obtaining private tutoring or access to international schools. This reform is causing a lot of investors to consider moving to the UK which is known for its education.”

He added: “I have also witnessed an increase in the demand for financing products for investments made in real estate by these investors. This increased need for mortgages and other forms of lending is certainly becoming more prominent amongst buyers who in the past would quite often disclose and promote the fact they paid in cash. This, in turn, changes the general habit of these investors.”

Catharine Che, director, head of Asia department at Sotheby’s Realty, said: “The number one trend would be increasing investment with [a] budget around £500,000. Target cities are London, Birmingham, Manchester, Oxford, Cambridge and York. In terms of home relocation, the budget would be around £5 to £10 million. Target houses located in London and London suburbs with good living environment and great schools.”

Joanne Chung, senior immigration solicitor at Woodcock Law & Notary Public, said: “We have seen many overseas buyers interested in new build properties, although there is a growing number of sourcing agents that offer a full project managed refurbishment service including HMOs. We continue to see steady growth in instructions, although numbers have reduced since the end of the stamp duty holiday.”

She added: “We expect demand from Asian investors for UK property to continue to run strong into 2022, as the shortage of homes remains a serious problem for the UK housing market. Young professionals are likely to look for rentals, which highlights a great potential for rental investment returns in major cities. We believe rental prices will grow even stronger as the UK market continues to grow alongside increased demand.”

Dr. Ian Zhu, head of China outbound investment – China Britain Services Group, Grant Thornton UK LLP, said: “My observation is the security became one of the major concerns. Some new buyers dare not to live in the house because they feel that the windows and doors can be easily broken into while high-security apartments the visitors have to go through various security checks.”

He went on: “Another trend for buy-to-let is that luxurious apartments are very popular with Chinese students whose parents are very supportive to let them stay in a two or three bedrooms apartment without sharing with others because of concerns regarding Covid-19 and offering enough space in case of another lockdown.”

Steven Landes, managing director of Hawksford, said: “The number one trend will be increasing competition from local buyers for the new UK properties that buyers from the Chinese/Asia markets tend to favour. This increasing competition is coming at a time when labour and material supply problems caused by Brexit and Covid have delayed many new developments restricting the supply of new properties.

He continued: “At the same time local buyers from the UK are seeing rock bottom interest rates making mortgages even more affordable for those whose incomes have been unaffected by Covid. This has little effect on Chinese/Asia investors investing in the UK residential property market as they tend to be cash buyers.”

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Searching and comparing

Amy Hon, senior partner – strategy at New Vision, said: “We expect the demand of the Chinese market on UK property investment and overseas investment will become more complicated in the year ahead, meaning Chinese clients will expect higher standard service from a specialist organisation.”

She added: “Having dealt with many Chinese clients, we have observed a noticeable trend. Clients used to query on a few properties, but they have become more eager to search and compare a wide range of properties nowadays. As an organisation providing service for buyers, our solid relationships with major developers and leading estate agents in the market allows us to provide a wide range of options and the most suitable and optimal solutions for our clients.

She continued: “Multiple property options, remote viewings, professional analysis reports and overall comprehensive planning from a specialist organisation like New Vision are the advantages that clients will benefit from to make a sensible and realistic investment decision even without a physical property viewing.”

Caryn (Shu Hui) Toh, associate solicitor at Ronald Fletcher Baker, commented: “Investing in digital marketing, high quality photographs, virtual tours and short film of the neighbourhood for example can enable buyers to have a true sense of where they will be living. The photographs would be targeted to the consumers’ appetite and the idea is that this will positively help them in their decision-making.

“Online platforms will also play a huge part in changing how investors, buyers and sellers navigate the residential property market and businesses. Gone are the days where you have to be ‘local’ to purchase properties. Of course, not forgetting that building relationships is still important.”

Lastly, Parikshat Chawla, director of industry relations at Pacaso, said: “The biggest trend I’ve noticed recently is the inclusion of shared workspaces in new developments – both apartment and villa projects. With the work from home movement now becoming the norm, many homeowners and renters still prefer to get out of the house to get some work done or make their Zoom calls etc. in privacy. These shared workspaces are an absolute boon for anyone in such a situation.”

By Matthew Lane

Source: Property Investor Today

The return of overseas buyers means expensive central London houses should lead the British property market next year when it comes to price growth, according to estate agent Winkworth.

Prime London real estate suffered during the pandemic as overseas buyers fled and some Londoners moved out of the capital. But international buyers are now returning, with booming demand in areas like Kensington and Chelsea.

Winkworth Chief Executive Dominic Agace said demand for prime central London properties was up 44% on pre-pandemic levels in the last quarter, compared to just 4% for suburban properties.

Agace said on the company’s podcast: “We will see the return of prime central London. It has been most affected by the pandemic and it hasn’t gone anywhere for the past six years. There will be significant pick up.

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“We are likely to see six to seven per cent growth next year. The country markets will continue at a lower rate, driven by a lack of supply, at around four to five per cent, with suburban London staying steady at three to four per cent, apart from the super suburbs that generally outperform.”

House prices have been rocketing during the pandemic as people search for bigger properties to accommodate the shift to working from home. Supply has failed to keep up with demand.

Prime properties in central London boroughs like Camden and Kensington have failed to keep pace with national price growth but the market is starting to pick up.

Last month estate agent Knight Frank said prime central London prices had risen by 1.1% so far this year thanks to the return of rich international buyers. Prices have risen consecutively for the last six month — the first time that has happened since before the Brexit referendum.

By Oscar Williams-Grut

Source: Evening Standard

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There is a new wave of overseas investors looking to buy into the UK rental market. We are seeing an emerging trend of moderately wealthy individuals who are looking for a relatively safe place to invest with a strong currency.

These are not the Pandoras Papers billionaires looking to hide cash in premium property, these people can only buy with a mortgage and even then, they need a tenant to pay rent to cover the cost of borrowing.

These new investors are similar to smaller UK landlords and are filling a gap in the private rental sector being left by a fall in domestic landlords.

The new overseas buyers look for somewhere safe to put their money that will produce sufficient income to cover their investment. Developers know this and this demand is underpinning the viability of larger and more impressive schemes. These developments boast top quality leisure facilities, hotel style concierge services and unrivalled communal areas.

This creates opportunities for British young professionals to rent quality accommodation and for UK management companies to let and manage the units on behalf of these investors. Developers are creating quality accommodation in city hubs such as Manchester and Leeds, knowing that many buyers will be investor landlords who will rent them out to the local population. This works well for the local area as the properties are filled quickly and the residents can engage with and be part of the community.

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However, these more modest investors need a mortgage in order to buy, which creates an opportunity for the mortgage finance market. There are very few lenders in the UK who have expertise in dealing with overseas buyers like this, with BC Invest being one of them. It is important to work with a specialist who can help smooth the borrower journey and deliver swiftly – for example committing to providing a loan offer within seven days of payment.

There is an opportunity here for the mortgage broking community to tap into this growing client base and advise foreign buyers on UK buy-to-let mortgages. They will need your advice, as this is a complex area and there are few products available.

In our own experience, we find that these clients make good credit-worthy borrowers but have difficulty accessing property finance due to their non-resident status. We see a growing demand from our developer relationships to have funding for their buyers, which we can provide, but there is an advice gap in this space.

Many lenders will support applications from expatriates who hold a UK passport with a UK bank account. It is a completely different ballgame with genuinely overseas investors when this may be their first significant transaction in the UK with no financial footprint here. Getting a UK bank account can be nigh on impossible and proving income can be challenging.

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This is why we work with a network of experienced brokers who have identified the opportunity within this space. UK property transactions can be incredibly opaque and frustrating at times, even when you have grown up here,. Whilst we may take our understanding of the legal system for granted it is not always user friendly and can be a worryingly slow process for international buyers used to immediacy of information. This is why the broker plays such a crucial role in the process and the efforts of these brokers to translate and smooth the process is hugely appreciated.

This year has demonstrated the resilience of the residential property market against a backdrop of economic uncertainty. Transaction volumes have at times hit record amounts and despite increase taxation, the international investor appetite has remained unwavering. We believe this international demand is set to grow and hence the demand for financial advice and support in these transactions will increase too.

Together we believe we are forging strong partnerships to support a challenging but rewarding market in a space where domestic landlords are scaling back. Providing transparency to an extremely opaque environment will allow the property market to continue to expand and the quality properties for the domestic rental occupiers will continue to improve.

By Richard Boyle

Source: Mortgage Strategy

Since the first UK national lockdown in March 2019, the presence of overseas buyers in the London market has been severely impacted, however, with the return of international travel, demand is returning to pre-pandemic levels, where two-bedroom apartments are proving most popular.

According to research by London buying agency Astute Property Search, overseas buyers are ‘hedging’ 2021 prices in anticipation of a stronger 2022 market.

Matt Turner, Founder of Astute Property Search, says: “Many of my clients are British expats, with plans to move back to the UK in 3-5 years’ time. They are mainly looking for homes that can double up as rental investments to cover themselves before they’re ready to move back but are essentially buying now to attempt to hedge 2021 prices before the market fully recovers in 2022. In the past few months we have seen a huge rise in enquires from expat couples that are coming over and block booking viewings for properties that fit their profile.

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“One of our best transactions this year was secured in St John’s Wood, for a client based in Europe and looking for a city pied a terre. Due to travel restrictions, they were not able to physically be in the London and “their viewing” was undertaken through video calls. Close to 50 per cent of all apartments in prime central London were sold to international buyers pre-pandemic and it’s this inability to travel that has seen a lull in the market, so having us on hand to verify and negotiate allowed them to secure a fantastic deal.”

Astute Property Search predict that apartments will see a renaissance and an increase in demand will see prices rise sharply 2022, especially for two-bedroom apartments, so now is the time for investors to secure the best deal. Furthermore, the return to offices is predicted to recover the near pre-pandemic levels in 2022, which may lead to some finding their new commute to be too lengthy that will further increase demand for London flats.

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One lasting impact of the recent lockdowns is the increased demand for space, which has seeped from the house market to flats, with overseas buyers seeking value in larger apartments.

Turner adds: “The studio and one-bedroom flat market has dropped significantly and will take the longest to recover, so currently we are encouraging our clients to purchase apartments with a minimum of two bedrooms in locations where value is still there to find.

“Space and square footage are key and I would go further to say that for now two bedroom apartments will be in higher demand from prospective tenants. Working from home has become the norm with tenants sleeping in one bedroom and then using the other as an office. Units with dedicated outside space such as balconies, communal gardens, terraces all carry a premium on the rental market, so are proving popular with international investors looking for strong yields.”

Source: Property Funds World