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Overseas Property Investors Conclude the Best Potential Sits Outside of London Property Market

For years, overseas property investors have concentrated mainly on the London property market. However, this is beginning to change. Indeed, Hong Kong and Saudi Arabia investors saw the potential in the regional markets outside London and have taken advantage of excellent price gains since 2020.

For the last 30 years, overseas property investors have pumped money into the London property market. Lots of jobs, a robust economy, and a booming property market made it an obvious choice.

But across the country, a similar story is emerging. Investors evaluate the property market searching for value and conclude that Manchester, Newcastle, and Leeds offer great potential.

Where are Overseas Property Investors Investing Outside London?

Between April 2020 and April 2021, home prices across the UK increased by 8.9%. In London, properties appreciated by 3.3%. However, in the northeast of England, house prices rocketed up by 16.9%.

But it’s not just appreciation rates that are making investors sit up and take notice. London house prices are twice that of the national average. In a pre-pandemic world, these discrepancies could be justified by proximity to employment. However, several factors have changed the game.

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Work-from-home has caused buyers to exit London in search of properties with more space. With fewer people obliged to commute daily, suburbs and regional cities are more appealing.

Meanwhile, successive governments have committed to a policy of decentralisation. While much of this process involves granting power to local governments, there are grants to encourage companies to set up regional offices. Indeed, Goldman Sachs announced a technology centre in Birmingham this April.

Where are Overseas Property Investors Going?

The majority of overseas property investors are focused on private homes for rent, particularly homes for young professionals. The business model is relatively straightforward: develop the property and keep the asset for rent, or sell it on, generally within Asia.

According to Savills, the combined investment into the property market in Manchester, Birmingham and Leeds was over £1bn in 2020. This figure constitutes a staggering £630m growth in two years. Better yields offered in the regions are one of the most significant factors in these increased investment flows.

Indeed, as long as regional cities offer better investment opportunities, the pattern will continue. Many major UK banks and finance are not interested in regeneration because of the risks involved. Without the help of overseas property investors, the UK’s housing shortage would be much worse.

Conclusion

For investors, finding opportunities outside London is producing higher yields. For many professionals, work from home is here to stay, which will allow a more flexible approach to buying housing in different areas.

With many cities around the country benefiting from the work of overseas property investors, other cities have begun to take note. With many areas in need of regeneration, these investment flows could be precisely what the country needs.

Written by Kelly Geeson

Source: Property Forum

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London sees surge in demand from Hong Kong buyers

Mortgage brokers and estate agents have reported increased demand from Hong Kong buyers following new security laws in the region as well as UK stamp duty changes, low interest rates and a weak pound.

Estate agents Chetertons says that the ongoing tension between Hong Kong and China resulting in Boris Johnson’s offer of British citizenship to three million of the city’s residents has boosted London’s appeal.

It says that between June 1 and July 7, the number of new buyers from Hong Kong registering with Chestertons more than doubled compared to the same period last year.

Chestertons’ data also shows that these buyers are expanding into areas that have not previously appealed to Hong Kong investors.

Previously buyers have looked at higher yielding areas such as Canary Wharf.

Recent interest has been more focused on family homes for people thinking of relocating.

South west London and central London have seen enquiries from Hong Kong buyers rise by 53 per cent compared to last year.

In the last four weeks in Putney, where there has traditionally been almost no interest from Hong Kong buyers, Chestertons has registered numerous new buyers.

Elsewhere in west London, 75 per cent of the apartments released in the first phase of a new development were reserved by Hong Kong buyers within a matter of weeks, although these were mainly for investment.

Chestertons’ managing director Guy Gittins says: “Given the close historic ties between Hong Kong and the UK, London has always been popular with Hong Kongers as a place to visit, invest and educate their children.

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“However, the current situation and uncertainty in Hong Kong has caused many to look at London property as a ‘safe haven’ investment, while the stamp duty holiday and the weak pound are added attractions.”

The surge in interest has also been noted by mortgage brokers.

Altura Mortgage Finance managing director Rob Gill says “There is certainly an increased interest in all things UK among Hong Kong residents at the moment.

“We are seeing an increased number of enquiries from potential Hong Kong buyers both directly and via our network of professional introducers.

“From a practical point of view however, few people move continents and buy a new home straight away, they are more likely to rent for a year or two before taking the plunge.

“We’re having plenty of conversations with sensible clients who want to understand their options and increase their chances of getting a good mortgage deal when they are ready to buy.”

Private Finance mortgage consultant Chris Sykes says: “Expats who may have been considering purchasing a UK property – either with the intention of using it as their main home in the long-run, as a holiday home or as an investment – may be encouraged to push ahead with purchases as a result of declining house prices and changes to the stamp duty threshold.

“We believe we will see more overseas buyers and expats looking to purchase UK property in the coming months.

“We have also seen a particular increase in mortgage enquiries from Hong Kong residents since the implementation of the new national security law.

“This sudden rise in demand is likely to continue to increase as the situation develops.”

By Leah Milner

Source: Mortgage Strategy