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Foreign investment drives rise in real estate deals

Overseas investors significantly contributed to a sharp rise in investment in Scottish commercial property in the first half, according to analysis from Knight Frank.

There was a 35% surge in deals to £688 million in the six months to the end of June, against £510m in the same period of 2020 – the height of the UK’s first lockdown.

Overseas investors have remained the biggest buyers of Scottish commercial property so far in 2021, making acquisitions totalling more than £300m.

Privately held property companies were involved in £115m of deals, while UK institutions accounted for another £60m.

According to Knight Frank, investment fell 15% between the first and second quarters of 2021, from £371m to £317m.

However, this does not include deals with undisclosed values, such as the sale of Neptune Energy’s Aberdeen headquarters in May – the biggest investment deal in the city since the pandemic began.

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Colliers’ Scotland’s snapshot for the second quarter of 2021 puts second quarter deals higher than the first – at more than £400m – though it says investment was about 20% below the five-year quarterly average of £528m, as the effects of the Covid-19 continue to be felt.

It says investment volumes over the first half were up by more than 50% on the same time in 2020.

Colliers says the four largest office deals in the second quarter were all recorded in Edinburgh, led by Rockstar Games buying its 75,000 sq ft building on Holyrood Road – the former headquarters of The Scotsman newspaper – for £31m, and the adjoining Holyrood Park House, home to Citigroup, for £17m.

Knight Frank lists alternatives and mixed-use schemes as the most popular asset classes in terms of investment volumes – including the £80m of funding for Moda’s Holland Park build-to-rent development in Glasgow – followed by offices and industrials.

Both agencies predict that, with a range of high-quality stock still being marketed, a flurry of deals could complete after the summer.

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “Scotland’s commercial property investment market is still recovering from the effects of the pandemic, but there are signs we are heading in the right direction as the economy re-opens.

Oliver Kolodseike, Deputy UK Chief Economist, Research and Forecasting, at Colliers, said: “There is pent-up capital waiting to be deployed in Scotland. A number of deals are currently under offer and should complete in the coming weeks and months.

“We expect a further boost with remaining restrictions due to be eased in Scotland on 9 August and we should return to some form of normality.”

In the office market, Colliers expects a strong rebound in the second half of the year as lockdown restrictions ease further. In one of the largest leasing deals of the second quarter, BT signed a pre-let for 80,000 sq ft at Dundee’s West Marketgait scheme.

Elliot Cassels, director, national capital markets in Edinburgh, added: “There has been strong investor demand for Edinburgh offices, with keen prices having been paid. Footfall in city centres still remains low and investor appetite thin for high street retail and leisure.”

In the retail sector, which has been hard hit by the fallout from Covid, around £60m was invested in the second quarter.

Although this was double the first-quarter figure, it is less than half the five-year average of £130m. The largest retail deal was the sale of a B&Q warehouse in East Kilbride to an American real estate investment trust for £19m.

The industrial sector saw £70m invested in the second quarter, against £52m in Q1, and about 10% above the five-year quarterly average of £62m. The largest deal was DataVita’s acquisition of the Fortis data centre at Strathclyde Business Park for £45m.

By Terry Murden

Source: Daily Business

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UK’s Expat Demographics & Latest Mortgage Trends

Introduction

As of 2019, people born outside of the UK – typically referred to as expatriates or expats – made up around 14% of the UK’s residents. That adds up to just under 10 million people. Now, all of these people need somewhere to live, so there is a lot of movement in the UK expat mortgage market every year. At the same time, many of these expats come with a fair amount of money in the bank, and UK property has long been seen as a sound investment. As a result, the number of expat buy to let mortgages on the average expat mortgage broker’s books has been rising steadily.

But what do we know about these expats? Where are they coming to the UK from, how are they affecting the UK’s demographics, and how are they coping with a mortgage market that is reeling from both Brexit and COVID?

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Overview of Expat Mortgage market

Expat Mortgage Brokers, banks and other property market professionals are seeing growing interest in expat buy to let mortgages and UK expat mortgages generally. Brexit may have cooled the desire for EU citizens buying 2nd homes in the UK, but it has done nothing to discourage EU nationals, whether expats, expat-hopefuls or not, to buy investment properties in the UK.

There are many reasons for this. The pound is weak relative to many major world currencies at the moment, and those whose currencies are more bullish – expats and investors from East Asia, Canada and the US, among many others – are eager to take advantage of that. After all, when the pound recovers, the value of their investment in their own currencies will rise dramatically. Overall confidence in the UK’s COVID vaccination program and economic recovery are high.

Other factors driving demand for UK expat mortgages and expat buy to let mortgages include the political troubles weakening China’s markets and the UK’s new Visa scheme, which allows BNO passport holders from Hong Kong to relocate to the UK easily.

Specialty Expat Mortgage Brokers are seeing a sharp increase in demand

Many mortgage brokers, banks and financial professionals who specialise in serving clients who work primarily in non-GBP currencies or who hold primarily offshore assets have seen a spike in interest beginning around January or February and continuing into the summer.

Some expat mortgage brokers have reported 3 times as many Hong Kong-based expat buy to let mortgage completions in the first quarter of 2021 than in a typical first quarter. Specialty expat mortgage brokers are seeing a corresponding increase in interest. It is not uncommon for enquiries for Residential Expat Mortgages and Expat Buy to Let Mortgages to have doubled recently, even discounting the extra interest from Hong Kong. Many tell us that even EU mortgage inquiries are on the rise, with around 30% more interest from that region in the last 6 months compared to the 6 before that.

Expat mortgage clients need special support, as it can be tricky to find lenders who are happy to accept payments that aren’t in sterling, or who have the necessary expertise to appreciate the value of offshore collateral.

Beyond Hong Kong, Expat Mortgage Brokers are seeing a lot of East Asian interest

Many overseas buy-to-let and residential expat mortgage specialists have reported year-on-year increases of 10% to as high as 20% from East Asian property buyers. Part of the reason for this is a kind of ‘perfect storm’ effect between London property prices actually falling by 3.4% across 2020 (measured in GBP) and the strength of their own currencies.

Over the course of 2020 a South Korean expat mortgage customer would have seen an effective 6.8% fall in London housing prices in their own currency. The price of an expat buy-to-let mortgage in Chinese yuan fell by 6.2% over 2020. Likewise, the price in Japanese yen fell by 5.6%

There have also been quite a few enquiries about UK Expat Mortgages from property buyers in Canada and the United States. Contrary to what many experts had predicted following Brexit, many expat buy to let mortgage customers in North America seem to feel that the UK is a more attractive place for property investment than the EU.

 A large amount of Expat Mortgage interest comes for UK nationals living overseas.

Another growing source of expat mortgage customers are UK citizens currently living abroad and paid in foreign currencies, but prefer to invest in UK properties. Many UK expats live in places like Germany, Paris, the UAE or the USA, and wish to invest in UK property on a Expat Buy to Let basis or wish to buy a home for family members who do live in the UK. There is an especially high amount of interest at price points around £500,000. Many expat mortgage professionals also report a growing interest in buying flats, which had begun to fall out of favour early in the pandemic.

Because these customers are not paid in sterling, though, they have discovered that they need to seek out specialist expat mortgage brokers like Expat Mortgages UK.

Who are these Expats and where are they coming to the UK from?

There are more people who were born overseas living in the UK now than ever before. Even after Brexit, there has been a steady increase. In 2004, some 5.3 million UK residents were expats. That number had nearly doubled to 9.5 million in 2019. The growth of the UK’s foreign-born has slowed since around 2016 when many began emigrating, but the overall figures still indicate substantial growth.

Brexit has been responsible for a demographic shift, of course. The last decade had seen EU-based immigration rising more rapidly than immigration form other countries. However, the majority of UK immigrants came from non-EU countries, and Brexit has done little to slow it. In 2019, for example, around 38% of UK immigrants came from the EU.

Compared to the native-born UK population, immigrants tend to be in the 26-64 age range. As of 2019, 70% of immigrants fell into this ‘working’ age category, whereas only 48% of UK born residents did.

Around 19% of UK natives were age 65 or older, whereas only 11% of migrants were. However, this varies substantially with country-of-origin. 17% of EU-14 immigrants were age 65+, but only 1% of those from Bulgaria and Romania were 65 or older.

At the other end of the spectrum, the demographics are more similar. UK natives aged 16-25 make up 12% of the population, and 11% of the immigrant population. Again, this varies by place of origin. Some 15% of EU-8 and EU-2 immigrants were younger, whereas only 5% of immigrants from India were aged 16-25.

Where do Immigrant Expats come from?

As of 2019, the last date we have good figures for, most of the expats coming to live in the UK came from either India, Poland or Pakistan. India contributed around 9% of the total immigrant numbers, as did Poland. Pakistan was slightly behind, at 6% of the total. Poland had been solidly in first place until around 2018. Roughly 100,000 Poles left the UK in 2018 and 2019.

What brings Expats to the UK?

The most common reason given for non-EU immigration was ‘family reasons’, at roughly 49%. Another 21% of non-EU immigrants said they came to work. Many of these people entered on family visas, and therefore are more likely to settle permanently in the UK compared to those on student visas or work visas.

Among EU-based immigrants, 48% said they came to work. Those numbers are even higher for immigrants from new EU member states – 62% of EU-2 immigrants came to work, and 59% of those from EU-8 countries.

Where do Immigrant Expats tend to live?

Unsurprisingly, London has a higher immigrant population than any other region in the UK. In 2019 35% of all immigrants to the UK lived in London and a further 13% lived elsewhere in the South East – accounting for just under half of all immigrants, more than 4.5 million. By comparison, only 10% of the UK’s native-born population lives in London.

On the other end of the spectrum, Northern Ireland, the North East and Wales each received only 1-2% of 2019’s immigrants to the UK.

Summary

Expats make up around 14% of the UK’s resident population. Expat mortgage brokers – those who specialise in serving clients who either currently work or have worked primarily in non-GBP currencies, or who hold primarily offshore assets – are seeing growing interest in Expat Buy to Let Mortgages and UK Expat Residential Mortgages generally.

This may be because at the moment the pound is weak relative to many major world currencies, but confidence in the UK’s COVID vaccination program and economic recovery are high, so that trend is expected to reverse. In short, money spent on UK properties now will be worth more in the Expat’s home country soon. Expat mortgage clients typically need specialist advice and guidance, as it can be tricky to find specialist lenders who are happy to accept payments in overseas currencies and with different work and immigration statuses etc.

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Overseas investors find UK regional property a safe bet

British homeowners are not the only ones feeling left out of London after a year of sharply rising house prices. Overseas investors from Saudi Arabia to Hong Kong were placing ever-increasing bets on the British regions, building houses there and making huge profits.

For three decades, overseas money flowed mainly into the capital, attracted by a booming economy and sharply rising house prices.

When the Saudi conglomerate AIMS Holdings rated the UK in 2019, it quickly came to the conclusion that people like Manchester, Newcastle and Leeds offer better value for money.

‘When we first wanted to invest in the UK, we looked at London. Then we see there are many more opportunities elsewhere. It was a real eye-opener, ‘said Abdulaziz Albassam, CEO of AIMS Investments, its wealth management arm.

The timing was perfect.

The average house price in England, the year to April 2021 increased by 8.9 percent. But in London, the rise was just 3.3 per cent, compared with 16.9 per cent in north-east England. In Scotland, the average house price rose by 6.3 per cent during the year to April.

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House prices in London is double that of the national average and the coronavirus pandemic has defended its attractions. Families are looking for larger homes with gardens outside the city, and many workers are no longer forced to commute daily to the office.

Meanwhile, employers are relocating jobs to local cities, where they can attract graduates by providing a better quality of life. Goldman Sachs announced in April a new technology center in Birmingham employing several hundred people, which is part of a growing trend.

The bulk of the investment flows into private houses for rent, mainly apartments for young professionals. The developer retains the asset or sells it to individuals, usually in Asia. They continue to manage the development for a fee and ensure that it retains value.

Savills, the advisory firm, said investment in the private rental sector in Manchester, Birmingham and Leeds together rose £ 1bn in 2020, up from £ 361m in 2018. Jacqui Daly, director of Savills for residential research, said ” The demand for investment is strong with lots of new entrants, both internally and internationally, and better returns mean that the regional market for urban and suburban buildings for rent attracts those who consider it long-term. ”

AIMS has acquired a majority stake in Beech Holdings, a Manchester developer that has started building dedicated student accommodation.

Wasim Choudhury, director of Beech Holdings, said he expects 20-25 percent capital growth between 2020 and 2025. “Covid has accelerated our thesis,” Choudhury said. ‘Seven or eight UK cities have become acceptable to institutional investors. The yield is higher than in the capital. ”

Beech is building more than 1,000 apartments and houses with a gross development value of around £ 350 million in Manchester and Newcastle, and is looking at Sheffield, Leeds and Birmingham. It uses old office buildings and repairs contaminated sites.

Founder Stephen Beech said the British chronic housing shortage without overseas investors would be even worse. ‘British banks are not interested in revival. This is too risky. An early scheme, Basil House, a converted 19th-century office building in central Manchester, now recommends renting £ 2,000 a month for a two-bedroom apartment, all bills included. “Students who rent from us want to stay when they get their first job.”

Beech is now concentrating on family homes to diversify its income mix.

Manchester City Council has defrauded investments and in 2014 partnered with Sheikh Mansour bin Zayed Al Nahyan, part of the ruling family of Abu Dhabi and owner of Manchester City Football Club. Together they build almost 1,500 houses that are mostly private houses.

The council also has a joint venture with Far East Consortium, a listed Hong Kong conglomerate that has been operating in London since 2011 but which began operating in Manchester in 2017.

They will build up to 15,000 new homes across North Manchester over the next 15-20 years. A fifth of them are ‘affordable’ or meet the needs that would not otherwise be met by the market, as defined by the government.

Gavin Taylor, FEC director in Manchester, said the range of blue-chip employers such as Amazon, the BBC and TalkTalk moves to the city coupled with business-friendly local leadership, it has made it an attractive place to invest.

FEC, with a £ 600m investment in the UK, is now looking at Bristol and Birmingham. It also shifts the focus from apartments to family homes. ‘Covid caused a reassessment of life. If someone closes their eyes and imagines their dream home, it has four walls and a garden. “It is very expensive in London,” he said.

Alasdair Nicholls, CEO of Native Land, a major UK residential property developer who regularly works with international investors, said their growing presence in areas outside London reflects their experience in the market.

‘[For a] ‘a new investor deciding to enter the UK market is the obvious first point in London,’ Nicholls said. ‘But we’re now at a point where it’s done, and it’s’ OK, well, we can leave for anywhere, Edinburgh, Manchester, Birmingham’. “

Native Land markets its first project outside London, a joint venture with US asset manager Nuveen of 152 luxury homes in the new St James Quarter Complex in Edinburgh city center, which he says is worth a total of around £ 100 million.

Native Land, which last year acquired a former department store in Guildford for redevelopment, sees other cities and towns in the UK following Edinburgh and Manchester to make their central areas desirable.

Nicholls said he expects international capital to buy into these opportunities. “I think it’s going to be a big piece of what we and others will do in the future,” he said.

Source: afegames

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Scottish property snapped up by ‘wall’ of overseas investment

A “WALL” of overseas investment is continuing to target Scotland’s “best long-income assets”, according to a report which underlines the recovery of the commercial property sector.

The volume of commercial property transactions jumped by 71 per cent in the second quarter versus the quarter before, with £300 million of deals traded.

While activity is still 30 per cent below the five-year average, as a result of the impact of the pandemic, the second half is expected to be more positive, according to the latest quarterly review by Edinburgh-based Lismore Real Estate Advisors.

Lismore said it understands there are three transactions worth more than £50m combined in the pipeline. Its report found there continues to be demand for space from life sciences companies and retail businesses looking for warehousing, though activity remains muted in city centres.

Chris Thornton, associate at Lismore, said: “Activity in the last quarter has continued to see the wall of overseas equity targeting our best long-income assets.

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“This has included the emergence of American REITs (real estate investment trusts) in the Scottish market, mainly focused on longer-income retail warehousing, with schemes anchored by food stores and value retailers being particularly liquid.

“We have also seen the continual growing appetite for anything close to the life sciences sector. On the downside, city centres are taking time to regain momentum with footfall remaining fickle and retailers and restaurateurs having to work very hard to attract customers back through the doors. Retail re-purposing has started in some of the strongest streets but there remains significant challenges for those city centre locations unable to attract alternative use investment.”

The report flagged “strong impetus” in the Scottish logistics market, where it said speculative developing is “becoming more feasible”.

It highlighted plans by Knight Property Group for a speculative development of 250,000 square feet of high specification and sustainable accommodation at the former Devro site in Bellshill.

By Scott Wright

Source: Herald Scotland

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Hong Kong buyers rush for properties in the capital

There has been significant increase in the number of people from Hong Kong purchasing homes in the capital since the UK government announced a new visa welcoming residents from the former British colony, earlier this year.

According to new figures from Chestertons, which has 31 branches across London, sales enquiries from Hong Kong buyers have risen by 20% over the past 18 months whilst demand for rental properties is expected to increase ahead of September, when students head to London’s universities.

Transactions by Hong Kong buyers have risen by 115% in London since May last year, the agency said.

Chestertons expects the uplift in Hong Kong investors to continue following the UK government’s recent visa offering to the 2.9 million Hongkongers with British National Overseas (BNO) status.

Guy Gittins, CEO of Chestertons, said: “Historically, the UK has always had a strong bond with Hong Kong, and London has been a key destination for Hong Kong property investors.

“Whilst the number of foreign investors in London fell dramatically during the height of the pandemic, the new visa regulations and imminent easing of travel restrictions has revived London’s appeal as an investment and lifestyle hotspot.”

A visa scheme to allow Hong Kong residents to come to the UK opened earlier tis year, with some 300,000 people expected to apply.

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The visa, which is open to holders of a British National (Overseas) passport and their immediate dependents, will offer a fast track to UK citizenship.

The UK launched the new visa after China imposed a new security law.

Those who apply and secure the visa will be able to apply for settlement after five years and then British citizenship after a further 12 months.

Richard Davies, head of lettings at Chestertons, commented: “A significant proportion of tenants in city centres are international students and corporate tenants. However, due to Covid-related travel bans, the number of these sorts of tenants declined considerably last year but we are now witnessing a clear increase.

“Inevitably, the return of renters from Hong Kong and other countries will drive rental prices across the capital. Areas such as Canary Wharf, Kensington, Covent Garden and Mayfair are likely to benefit the most, as they are especially popular with our international clientele.”

By MARC DA SILVA

Source: Property Industry Eye

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Middle East buyers step up UK property purchases

Buyers from the Middle East are playing a more active role in the UK property market, snapping up 16 per cent of all real estate by volume sold to overseas buyers in the first three months of this year, according to property consultancy Knight Frank.

The proportion of properties bought by Middle Eastern investors was lower than those from Europe (who made up 59 per cent of overseas purchasers) and Asia (18 per cent), but was the highest since the onset of Covid-19 and is expected to tick up further when travel restrictions ease, the consultancy said.

“The relaxation of international travel rules will provide a boost for the prime central London property market but prices are on the up anyway,” Henry Faun, a partner at Knight Frank’s Middle East private office arm, said.

“Things are picking up where they left off after the general election in December 2019 and Middle Eastern buyers can recognise good value after five or six years of falling prices [in central London].”

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Property prices in prime central London areas rose for the first time in five years during the first quarter, but only marginally – by 0.3 per cent, the consultancy said.

Prime central London prices had declined by 20 per cent between 2014 and the first half of last year, and “looked ripe for recovery in early 2020 after five years of price falls”, Frances Clacy, associate director at consultancy Savills, said last month.

“The pandemic put that on hold but does not appear to have dented the appeal of the city’s very best residential real estate,” she added.

Savills is forecasting 3 per cent price growth for prime central London residential prices this year, followed by a 7 per cent hike next year. Over the next five years, it expects prime central London prices to grow by 21.6 per cent.

“It now looks as though buyers are themselves calling the bottom of the market,” Ms Clacy said.

Buyers of UK properties in foreign currencies had already seen the discount available to them in other currencies being eroded by the rally in the UK pound, Knight Frank said.

The combined price and currency discount for buyers of prime central London property in US dollars, compared to the period before the Brexit vote took place in June 2016, fell to 19.2 per cent at the end of May, from 24.3 per cent at the end of last year, Knight Frank said.

The pound has gained more than 12 per cent against the US dollar over the past 12 months to $1.4109 at 12.25pm UAE time.

Transactions for prime central London properties soared in March, as buyers attempted to complete deals before two deadlines – the end of a stamp duty (a UK property tax) holiday (although this was subsequently extended until June) and the introduction of a 2 per cent surcharge for overseas buyers from April.

This led to the highest number of offers being accepted and new prospective buyers being registered in London for almost 10 years, according to a report by Emirates NBD’s private banking arm.

“There have been some encouraging signs in the prime central London market over the first months of the year and the return of international travel and therefore buyers should have a galvanising effect on prices,” the Dubai-based lender said.

By Michael Fahy

Source: The National News

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Rising numbers of expats and foreign buyers eye UK property market’s opportunities

Mortgage brokers, banks and property market professionals have reported rising interest from foreign buyers and expats looking to snap up homes here in the UK.

UK nationals living or working abroad and foreign investors from the US, Canada and East Asian countries are cashing on a weaker pound, a price slump in London’s new-build market and renewed confidence in the UK’s economy and vaccine programme.

Meanwhile political turbulence in China and the UK government’s new Visa scheme, open to holders of British National Overseas (BNO) passports in Hong Kong giving citizens the chance to relocate, has also driven up overseas interest in UK property.

Since the start of the year, bank’s say they have seen foreign income mortgage business rise.

Skipton International reported a trebling of mortgage completions from Hong Kong residents purchasing buy-to-let properties in the first quarter of 2021. Furthermore, between January to May the bank saw a 34 per cent increase in enquiries from residents in the EU compared to August to December 2020.

For Hong Kong buyers, both London and the South East of England were the most popular locations closely followed by the North West and Midlands.

Roger Hughes, Skipton International’s business development manager, said investors saw the UK as a “solid and stable jurisdiction”.

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Mortgage brokers have also reported more interest from overseas buyers.

Richard Campo said between March and April he saw a 137 per cent rise in enquiries about foreign income mortgages.

“We noticed a huge spike in enquiries from buyers living abroad wanting more information about getting a mortgage supported by foreign income, way above what we have seen elsewhere in the business,” he said.

“It’s logical as lockdown restrictions ease and pent up demand is released coupled with the vaccine roll-out going well. What’s interesting though is that they are not super-high-end buyers. We’re seeing a lot of expats and new buyers looking around the £500,000 mark.”

East Asian interest

New-build snagging and property management firm BuildScan said in May it saw an 18 per cent year-on-year rise in enquiries from East Asian buyers who had recently purchased new-build properties in London.

According to the firm’s analysis, the impact of a weaker pound and lower new-build property prices dampened by the pandemic offered opportunities for East Asian investors.

Between January 2020 and December, the health crisis caused new-build property prices in the Capital to fall by 3.4 per cent to £488,371.

But fluctuating exchange rates meant South Korean homebuyers would have benefitted from a 6.8 per cent fall in prices when compared to the average price at the start of the year. Chinese buyers saw a 6.2 per cent drop and Japanese buyers a decline of 5.6 per cent.

Homebuyers from Thailand, Malaysia and Hong Kong would have secured smaller discounts of between 0.9 per cent and 1.8 per cent.

Harry Yates, founder and managing director of BuildScan, said: “Despite the problems posed by the pandemic, we’ve continued to see a high degree of interest in the London market from East Asia.

“This has been driven, in part, by factors such as BNO visa availability for those relocating from Hong Kong, as well as the opportunity to cash in on a stamp duty saving.

“Fluctuating exchange rates have also boosted the affordability of London new-build homes which has also caused many savvy investors to act sooner rather than later. Although the pound has rallied of late, the London market remains an area of focus for many foreign buyers.”

Oxford estate agent Wallers has also reported a rise in enquiries in non-European overseas buyers over the past six to nine months, particularly from the Far East. He also noted a significant proportion of the enquiries were from families from Hong Kong who want to relocate to a different part of the world because of political troubles.

He added: “We have also seen more enquiries than normal from buyers in the USA and Canada, and there has been a sense that they are seeing the UK in more attractive terms now that it is out of the EU, which has been contrary to my own preconceived ideas about what Brexit might do to our property market.”

Safe bet

David Baker said his firm was being contacted by UK nationals who work or live overseas in the US and Dubai and they want to buy in the UK either for a family member or to rent it out. He is also seeing interest around the £500,000 price point. They have also had enquiries from British citizens working in Paris and Germany.

“We’re seeing lots of business from people not paid in sterling who want to buy in the UK,” said Baker. “I’m doing more of this type of business than ever before.

“The feeling is that the UK is a good place to have your money, and London is a safe bet.”

Baker said while there was a lot of interest in houses with gardens, he was seeing a gradual shift towards flats, which fell out of favour during the height of the pandemic.

He added: “Buyers are seeing the potential for deals to be had because they are not as popular as they once were. And those who are buying to rent out aren’t as concerned about garden space.”

By Samantha Partington

Source: Mortgage Solutions

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Middle East investors begin to return to UK’s property market

Investors from the Middle East are beginning to return to the UK’s property market, according to the latest data compiled by global property consultancy Knight Frank.

The firm’s data highlights that 16 per cent of all sales to overseas buyers in the first three months of 2021 were to Middle Eastern buyers, up from less than 10 per cent in the second and third quarters of last year. This is the highest proportion of Middle Eastern interest since the outbreak of COVID-19 in the UK.

Despite early signs of a recovery, the firm says Middle Eastern investment is still some way off pre-COVID levels, yet it expects activity to tick up further as international travel restrictions ease.

The data highlights that buyers from the GCC are currently ranked third most prominent in the UK, only surpassed by buyers from Asia (18 per cent) and Europe (59 per cent).

“International demand for London property has been building over the last 12 months despite global travel restrictions,” said Tom Bill, head of UK residential research at Knight Frank. “It has led to frustration on the part of some prospective buyers, particularly against the backdrop of the UK’s successful vaccination programme. Once travel rules are relaxed, we expect normal service to resume, including London’s long-standing relationship with buyers from the Middle East.”

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Despite lower-than-normal levels of investment from GCC investors, Knight Frank’s Global Wealth Ambassador to the Middle East, who works closely with the region’s high net worth individuals and family offices, has completed almost £90m worth of sales since the UK went into lockdown.

Moreas Madani, Middle East Global Wealth Ambassador at Knight Frank, said, “There is a particularly high demand from GCC investors for best-in-class new build projects in and around Mayfair.

“We are seeing steady interest from the Middle East; however, the biggest challenge remains restrictions on international travel. As this eases, and post-Ramadan, we are expecting to see more activity from the region as pent-up demand is released.”

Lodha, the developer behind No.1 Grosvenor Square, the former US Embassy and the Canadian High Commission, is witnessing first-hand the uptick in demand from Middle Eastern buyers. No.1 Grosvenor Square offers 44 Grade I listed apartments, through Knight Frank (+44 20 7861 5461).

Gabriel York, Co-CEO of Lodha UK comments, “We have seen a steady increase in enquiries from prospective purchasers from the Middle East since the start of the new year, and we expect this to continue through the summer as London re-opens and international travel resumes. We are now meeting numerous GCC families and business people who may have previously stayed in a hotel suite when travelling to London but are now looking to acquire a permanent residence in the city.

“They are attracted to No. 1 Grosvenor Square by the prestige and grandeur of the building, the central Mayfair location, the quality of the amenities and the desire for exceptional services that are personalised for them. The unique automated parking system, known as the vault, has also been a particular draw for customers from the Middle East with special car collections who want a total security for their vehicles.

“Health and wellbeing are increasingly important factors in property decisions, and purchasers are seeking residences close to garden squares and parks with exceptional health facilities and easy access to health services. No 1 Grosvenor Square is located on London’s second-largest garden square and within walking distance to central London’s largest park, Hyde Park. The building contains its health and wellness centre, including 25m swimming pool, gym, pilates room, treatment and consultation rooms, and is supported by health advisers from a range of wellness and medical disciplines.”

Source: Times of Man

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Chinese investors – will there be a drop in buying after the stamp duty holiday?

The stamp duty holiday – which began in July last year and will continue in its current format until the end of June, before applying to lower-priced properties until September 30 2021 – triggered significant activity last year among Chinese residential buyers in the UK.

Such activity has continued through into this year, with Chinese buyers still having a major influence on some areas of the UK property market. In 2019, spending reached £7.7 billion in London alone, according to the Office of National Statistics.

And, despite the Covid-related restrictions on travel out of China for much of the last year, the stamp duty holiday has helped to keep demand and investment high.

But, according to Domenica Di Lieto – chief executive of Chinese planning and marketing consultancy, Emerging Communications – there remains the question of whether we are seeing the best of Chinese buying, or could it simply be the tip of the iceberg?

“There is no shortage of research highlighting the enormous personal investment wealth held by China’s successful middle class,” she said. “According to Tsangs Group, there are currently 2.3 million HNWIs in China, and more than 26,000 Ultra HNWIs with £25 million or more in investable finance.”

She added: “The Hurun Report states that 61% of HNWIs invest through international residential property. This is a similar finding to previous annual reports, and is mirrored by findings in research by Juwai, Asia’s largest real estate technology company. In addition, most UHNWIs and HNWIs intend to live overseas, with 37% intending to make an international home their primary residence.”

Previously, Di Lieto states, the US was the preferred destination for private property acquisition, but the UK – and London in particular – is now the primary choice ‘for several reasons’.

“The key attractions are a stable and well-regulated housing market that offers good returns, plus high yield from rent. These factors are accompanied by the weak pound, and relatively low stamp duty compared to other locations,” she explained.

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“In the case of UHNWIs alone, investable wealth amounts to £396.5 trillion. Given that the UK residential property market is the single most popular option for investment indicates that Chinese buying so far is potentially the beginning of much greater acquisition to follow.”

She believes that not only is the potential of Chinese buying significant now, but it will grow. “China is the only major economy that has got bigger during Covid, and is due to become the largest in the world by 2027. The major beneficiary of growth will be the Chinese middle class,” she said.

“The existing property buying demographic will acquire more income, but the actual numbers of HNWIs will also grow in size considerably within the next decade.”

Until now, Di Lieto says, it has primarily been those living in Tier 1 cities such as Shanghai and Beijing that have purchased in the UK. But China’s fastest economic growth is taking place in Tier 2, 3 and 4 cities, she argues, creating a new cohort of wealth.

“What’s more, they show every sign of sharing the same motivations to purchase UK property,” she added.

A key element of this is supporting the education of children studying abroad, which is the single biggest driver of residential buying interest for the Chinese.

According to Juwai research, some 83% of HNWIs intend to educate their children overseas. Di Lieto says that, as an international higher education destination, the UK is now the most popular, and increases its lead every year.

“The US trade war with China along with visa restrictions, has seen Chinese student enrolments in America plummet in favour of UK universities,” she said. “But other formerly popular countries for study have damaging disputes with China. Canada, New Zealand and Australia have worsening relations, which have seen student numbers diverted towards the UK. Within China’s border, the popular favour of study in Hong Kong has waned, and with it diversion to these shores.”

That said, Covid has inevitably had an impact on the numbers of new Chinese students in the UK. Last year, many yet to start their studies took a gap year at home in anticipation of the pandemic becoming more controlled.

“This has resulted in two years of normal Chinese student intake wanting to join UK universities in September this year, and the success of the UK’s vaccination programme is helping to drive demand,” Di Lieto said.

“There is another positive to higher education-driven property purchase. Traditionally, Chinese students learning abroad have come overwhelmingly from Tier 1 cities, but economic expansion outside these areas means new student catchment areas are growing at an increasing rate.”

Indicative of increased Chinese interest in university towns is Jawai’s annual report on the towns and cities prospective buyers find of most interest. Cambridge – world renowned for its university and status as a growing tech hub – has now become the UK’s fourth most popular location.

“Aside from HNWIs and the parents of students, there is another major group from China that buys UK property. Chinese alumni of the British higher education system often acquire housing as an investment,” Di Lieto explained.

“Having lived in the UK, they have a high degree of confidence as buyers, and it is not unusual for them to purchase sight unseen, particularly if there is recommendation from friends or family. This group is also growing in number and wealth.”

Another positive for developers and agents, according to Di Lieto, is that investors in China make their own financial decisions. According to a paper by BVI Finance, the Chinese wealthy middle classes manage their own investment finances, a behaviour driven by a culture of self-sufficiency. Individuals and families make their own decisions, resulting in clear pathways for selling.

“However, the majority of agents and developers do not pay enough attention to understanding Chinese buyers, or invest sufficiently in communicating with prospects,” Di Lieto claimed.

“In particular, there is a failure to create effective sales journeys, and crude use of Chinese social media. For example, unlike counterparts elsewhere, no UK agents or developers utilise the benefits of WeChat mini programmes, which is China’s most popular social media sales format. This presents a significant barrier to unlocking the real potential of the market.”

She concluded: “There is strong desire in China, and among Chinese expats, to buy residential property in the UK, but buyers have yet to be met on their terms.”

By Matthew Lane

Source: Property Investor Today

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London homes of the rich and famous draw Hong Kong buyers

Hongkongers are among the keenest buyers of homes that have been owned or rented by Hollywood actors, pop stars and tycoons, seeing them as a sound investment whose resale value is likely to be boosted by their celebrity associations, according to a London-based luxury property agency.

“Hong Kong and mainland Chinese buyers love buying prestigious homes, and if a mansion, penthouse or house in London has a famous or prestigious former owner or tenant, it does attract their attention,” said Mark Pollack, co-founding director of Aston Chase. His agency has completed more than £25 million (US$35 million) worth of sales to Hong Kong buyers, many of whom bought celebrity-owned or high-profile London homes.

A-list celebrities lend the most cachet to a property and can lift the asking price by up to 10 per cent. Their association can also generate worldwide exposure in the media.

Such luxury homes are typically already decked out with the most sought-after features by wealthy buyers, including total privacy, gymnasiums, spas, swimming pools and concierge services. But an association with a movie or pop star, especially one adored by the public, gives agents another selling point.

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Over the last five years there has been a shift in attitudes in sync with the popularity of social media that has paved the way for some celebrities to collaborate with agents instructed to market their properties, according to Aston Chase. The open manner in which the ownership of properties has to be registered both in the UK and overseas also means the rich and famous had become more relaxed about helping advertise their houses.
Aston Chase recently sold a Hong Kong buyer a top floor residence at the Corinthia Hotel, which has been used over the years for exclusive events and stays by guests including American music stars Jay-Z and Rihanna. The £10.75 million penthouse flat has a floor area of 3,703 square feet and is part of the Corinthia Residences, which connects directly to the hotel in the Whitehall area of London.

A newly refurbished three-bedroom duplex residence at Portland Place that was formerly the London residence of Sir Carl Meyer, chairman of De Beers diamonds and jewellers, was also sold to a Hong Kong family for £4.4 million, the agency said.

“We have had several inquiries from Hong Kong buyers for Eglon House,” said Howard Kayman, associate director at Aston Chase. “All of them have been families with several children, with the buyers wanting a large family house with plenty of bedroom suites, and also facilities, which Eglon House offers, where the head of the family can work from home and run their business.”
A penthouse in the prestigious One Hyde Park in Knightsbridge owned by Nick Candy is on the market with Knight Frank and Savills for £175 million. The 18,000 sq ft property with five bedrooms including the master suite is the flagship penthouse of the property tycoon.
It has a private spa and temperature-controlled wine room for 750 bottles.
“The Candy brand is recognised globally for its world-leading luxury interior design and unparalleled attention to detail,” Candy said in an emailed response to the Post. “This level of luxury and specification has always appealed to ultra-high net worth Hong Kong and Chinese buyers who want the very best.”

By Cheryl Arcibal

Source: SCMP

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