Regular takeover of real estate in London, investment opportunities arise

PETALING JAYA (October 28): In Knight Frank’s webinar on “Investing in London Property – A Step-by-Step Guide” held on Thursday, panelists spoke about the feelings of international buyers towards London property and some of the aspects that buyers should be aware of in investing in London.

Hosted by Victoria Garrett, Knight Frank’s Asia-Pacific Residential Sector Manager, the panelists were Knight Frank’s International Project Sales Manager in London, Seb Warner, Knight Frank’s Finance Manager for New Homes, David Hall, Knight Frank’s residential research partner, Oliver Knight, the manager of Knight Frank in Singapore. International Residential Project Marketing (IPM) Nicholas Keong, Knight Frank, Head of IPM Mainland China, Samantha Yu, Knight Frank Malaysia, Head of IPM, Dominic Heaton-Watson, and Knight Frank Hong Kong, Head of international residential sales, Daniel Anderson.

Knight noted that over the past few months the average home value has risen 2.3% for the year to September and this has come as a result of the search spaces trend following the Covid-19 pandemic, among homeowners and a relatively growing apartment market.

“When we look at what is currently going on in prices in central London, however, the numbers suggest that the region continues on the path to recovery, highlighting the underlying strength of the central central market. London, despite what has been an incredibly uncertain backdrop.

Prices in London have remained robust and in demand during the pandemic. Knight estimated that 2021 was an extremely strong year in terms of the number of transactions and to some extent those numbers may have been flattened by the stamp duty holiday that was introduced at the end of the year. last.

“A record number of deals were closed in the main central London market in June, as buyers intend to exceed the original public holiday deadline and save that maximum of £ 15,000. Inevitably, the peak was followed by a bit of attractiveness in July and August, the sales volume of which we have seen since then settle in roughly, in line with where they were before the pandemic, ”he said. declared Knight.

Knight pointed out that there has been increased demand for new products, especially from investors and second home buyers looking for property in the capital.

“Demand is also supported by the return of international buyers and the lifting of travel restrictions, albeit quite erratically. Thus, the recovery of foreign demand and international buyers in London should be a fairly gradual process. We also expect the first wave of demand from overseas buyers to be concentrated in the new construction market and there is a clear appeal for ready-to-move-in properties that do not require any work or can be purchased off-plan. .

Regarding the rental market in prime London, Knight estimated that there had been a shift in recent months from a tenant market to an owner market, due to extremely strong tenant demand, which does not match the offer.

“We are seeing upward pressure returns which are being put on the rental value. This is where rents in central London rose 2.8% in 3Q2021, which was the strongest quarterly growth we’ve seen in the central London rental market in over 10 years. This is because tenants are looking for a fairly limited stock and this is something that has been replicated in the market.

He added that average prices in central London rose less than 1% for the year through September, but the Travel Directorate has been for more positive growth, so prices in the central London are expected to end this year up around 2%.

“Next year we expect a very strong rebound in central London with 7% growth, due to pent-up demand from international buyers returning to the market in a much more significant way than we have seen. over the past 18 years. months or so, ”Knight said.

The outlook for the prospects for wealth creation gives us confidence in the medium to long term in central London, and prices are expected to rise by around 25% over the next five years, making it the best performing market in the world. UK. In the rental market, we will see similar levels of strong growth in rental values ​​driven by the expectation of an acute shortage and rental stock relative to demand. “

Meanwhile, Keong said Singaporean investors have taken a more cautious approach by becoming increasingly selective during this period. We continue to see healthy underlying demand, particularly from first-time buyers looking to diversify their portfolios outside of Singapore, as well as savvy investors who have seen price consolidation since Brexit, while also benefiting from ‘higher purchasing power due to the fall of the pound sterling against the Singapore dollar, certainly by historical standards.

He advised investors to focus on location and connectivity when buying properties in London.

“Look at the locations that are served by existing transport links, but also at upcoming improvements to its infrastructure such as Crossrail, or extensions to its existing train lines. These locations are often accompanied by exciting new regeneration projects that create new residential, commercial, commercial and public opportunities that create long-term value for the region. Bringing in new amenities such as restaurants, cafes and social spaces, and with brand new contemporary homes, these projects are desirable when thinking about the modern and evolving lifestyle needs of people for years to come.

In China, Yu revealed that buyers have shown a great deal of interest in real estate investing in the UK, especially in London. “The average purchase price has increased by around 20-30% over the past eight months and we have also received inquiries from parents looking to buy property in the UK for their children to study abroad. “

Hu observed that the UK market remains strong and developers are already reducing the discount level due to growing interest from buyers. For buyers who wish to invest in the UK, it is important to enter the market as soon as possible.

While for those who are planning to buy completed projects or projects that are close to being completed, this is a good way to enter as the rental market has been very active.

According to Heaton-Watson, homeowners and renters today are looking for additional space in the property to have more flexibility, whether it’s working from home or just extra space for a second bedroom.

“My advice to buyers would be to look at public transport and connectivity. If you have a train station within a 10-minute walk of your property, it not only serves as a protection for the value of the real estate investment, but will also be an engine and catalyst for price growth in the future.

Anderson said there are also a large number of people looking to relocate to the UK, which has enabled many agents in Hong Kong to sell properties overseas. “Therefore, it is important to make sure that you are buying with an agent who will be present throughout the sales process, as well as in after-sales service. There is a lot to consider when moving to the UK so make sure there is an agent who can look after you on all accounts.

Asked about the landscape of an international resident buying in London during the question-and-answer session, Hall revealed that there has been a huge increase in purchases from international investors in London over the past six months, in especially from the United States and Australia.

“One of the UK’s biggest markets has always been Hong Kong. The restriction on travel within the country has made the market slightly lower than we would normally expect, but we can see signs of rapidly increasing transaction levels, ”he said.

“The criteria vary depending on how you buy properties, whether for your own stay or for renting. There are solutions for international purchases that are less than or equal to the price you get as a UK resident.

Regarding future growth hot spots in London over the next three years, Warner felt the Royal Docks in the east side of London is a very strong investment area. It has a quieter setting than being in the hustle and bustle of the city, and there is good connectivity, with an upcoming Crossrail opening in the area soon.

In the western part of London, the Ealing and Chiswick properties have traditionally been much lower in value. With the new Crossrail stations, however, they are expected to benefit greatly, which can lead to growth, Warner said, adding that a good balance of green space can also add value to properties in the area.