Foreign buyers are becoming increasingly important to the UK residential property market, accounting for one third of all transactions in prime central London, says Knight Frank. According to new research, purchasers from overseas buy 75% of properties valued over £5 million. London’s robust economy and stable political environment are attractive to foreigners, and in turn their investment is helping to fuel the city’s property market, Knight Frank has found.
Buyers from the BRIC nations Brazil, Russia, India and China are having a particular effect on the UK residential market. The four nations, which are expanding exponentially, are widely forecast to exert increasing influence on the global economic stage, according to this research: ‘UK residential purchases represent both an attractive lifestyle choice and a safe haven investment opportunity for non-domiciled residents,’ commented Liam Bailey from Knight Frank research.
The presence of Russian buyers has already had a pronounced impact on price growth in prime London locations such as Knightsbridge and Belgravia and Knight Frank estimates that this activity will increase by 10% per year over the next two years. ‘It is difficult to place Russian buyers within a tightly defined price band as they can be interested in anything over £1 million up to £10 million, and in some cases, considerably higher than this,’ said Mr Bailey. Russian buyers are also purchasing properties in the country – between May and September 2006 Russians accounted for over 8% of Knight Frank sales of country properties above £2 million and just under 39% of properties above £5 million.
Meanwhile the UK has become the most popular investor destination outside of the Far East for Hong Kong buyers, and Knight Frank predicts there will be a 5% – 7% increase in Chinese purchasers over the next year. Asian buyers tend to focus on the apartment sector at prices between £300,000 to £600,000 depending on location. There is also some interest in prime locations such as Knightsbridge and Belgravia where budgets will typically range between £1 million and £2 million.
Indian buyers are also making their presence felt in the London property market. ‘Destination addresses’ such as Grosvenor Square and Park Lane are popular with the top end buyers and demand is particularly high in the £400,000-£700,000 price bracket in locations such as St John’s Wood and Kensington. Knight Frank also foresees a 5% – 7% rise in Indian buyers over the coming year.
Brazilian buyer activity in the UK has so far been very limited, according to the report, predominantly due to affordability and unfavourable exchange rates. But as the Brazilian economy expands further Knight Frank expects to see major Brazilian companies establishing a foothold in the UK as a European base, which will help to bring these buyers into the London market in coming years.