Overseas money continues to pour into London. 74% of all transactions in the capital in the last 12 months were to foreign investors. This figure rises to 90% of deals over the 100 Million pound bracket. Sterling has strengthened marginally but still remains well off its pre-downturn peak.
Tourist numbers remain buoyant as a result. Debt remains cheap, due to record low interest rates. Various events in the last 3 years (Diamond Jubilee, Olympic Games, Royal baby e.t.c) have kept central London at the top of the global agenda, differentiating it/ excluding it/ separating it from the wider domestic economy. We now most certainly have 2 distinctively different economies: the London economy and the rest of the UK.
All this certainty, coupled with the uncertainty that prevails around Euro zone and the rest of the world resulted in European buyer registrations to rise again, even in the middle of the Euro crisis. Russian and Chinese investors/purchasers though, were knocked back below 20th position.
High-net-worth overseas purchasers are driving residential development steadily upmarket. The further upmarket schemes go, the greater the demand for quality ancillary services. Nobody wants to live and/or work in poorly served schemes. Property Developers that get the balance right, create premium values. We are consequently seeing a plethora of changes in mixed-development strategies, with developers introducing lavish new retail, leisure and communal facilities, and looking much more closely at the requirements of their target customers whether residential or office investments.
Research on recorded visitor data and buyer / tenant registrations in and around London, through web sites shows a significant change in visitor/investor/purchaser demographics. Surprisingly, Russia has fallen from 6th to 22nd position in just 3 years, China has dropped from 3rd to 23rd but surprisingly Greece has shown steady growth climbing from 28th to 16th as the effects of the Eurozone crisis continue to be felt. These particular results appear to show that increased interest from European buyers and tenants, as a result of the Euro crisis has pushed the usual ‘’big investors’’ down the table with the influential Russian market surprisingly slipping outside of the ‘Top 20’ for the first time in years.
The question that remains now, is ‘why this change’? Could this also be an indication of worsening home economies in both Russia and China?
Although we know that the Eurozone crisis has had a significant effect on the number of foreign buyers/investors in London, the latest figures show significant movement in the European sector, displacing interest from wealthy Asian and Middle Eastern investors/purchasers.
London has always been a hub of diversity with a vibrant mixture of cultures and values but it appears that it is now edging towards a more continental feel. With the current state of the Greek economy it could be expected that Greek interest in London property would rise. However what is interesting to note is that perhaps this is a more widespread trend, with 9 European countries currently compromising the ‘Top 20’, an increase of 15% since 2010.
An unexpected finding, was that European neighbours such as Sweden and Estonia are experiencing huge growth in visiting figures with Estonia in particular climbing a staggering 72 places. Sweden completes the ‘Top 20’ with a jump of 21 places from 41st position.
It is also surprising to find that other usually popular traffic locations have dropped significantly, such as India dropping from 4th to 10th and Pakistan falling from 19th to 31st. Traffic has increased from Spain, Italy, Germany and Greece with European buyers taking a real fancy for the safety and security that the London property market provides.
It will of course be interesting to see whether this trend continues or whether the influx of European purchasers will slow down as the Euro crisis stabilises and/or deepens.
MARIO APOSTOLOU
Leading Property Expert
18.09.2013
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Mario’s extensive 27 years of property investing experience with almost 20 years investing in London culminated in him launching a number of property investment companies since 1990 both in the UK and abroad. He is now about to launch another brilliant venture, details of which will be announced soon. However, he admits that his success was enabled due to a passionately devoted team, carefully selected. His passion is to provide investors and clients with a high level of quality advice, professional market analysis and outstanding service, all that he is renowned for. Corporate investors sometimes overlook the fact that the property business is about people and how you relate to them, whether they are staff or investors/clients. Mario repeatedly says: “I consider myself fortunate to be an architect in the property business as this combination gives me so much personal fulfilment now as it did 27 years ago, whether that be from helping my team to develop their potential or helping an investor or a vendor achieve his goals. If I was born again I would love to do exactly the same.”
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