While it’s no secret that the skies over London have been particularly dark in recent weeks (days), in the central London property market at least, there is a chink of brightness breaking through. For despite shying away after the EU referendum, European investors are back and picking up pace.
Homes in the prestigious prime London neighbourhoods of Kensington and Chelsea, Belgravia and Mayfair have always proven to be more resilient in terms of values during times of political and economic uncertainty, and the continued draw of London as a global city means they’re remaining desirable. Around one in eight of properties in these postcodes currently goes to buyers from Europe, up three per cent in the past year, with current London buyers likely to be EU nationals still enthusiastic about a British base.
According to figures from Hamptons International, London has seen a pickup in international based landlords this year. The proportion of London homes let by an overseas landlord peaked at 20 per cent in 2011, but fell back to 7 per cent in 2017 – the lowest point on record. However, unlike the GB average, London saw a 5 per cent rise in the proportion of homes let by an overseas landlord between 2017 and 2018 suggesting that, whatever the official EU line, European investors are backing London.
One reason for this, of course, is that the weaker pound against the Euro has made London unusually affordable for European buyers. As a result, according to a recent Frank Knight Survey, buyers from across Europe were course to exceed their 10-year average levels of investment of €155bn (£138bn) by the end of 2018, with more than 20 per cent of the 155 European real estate investors citing the UK as their preferred investment market in 2018, rising from 11.9 per cent in 2017. Hampstead estate agency Glentree Estates, which sells around 10 to 15 per cent of all luxury property in London, reported sales of £381m worth of property in the past two years, 50 per cent of which had been directly attributable to the drop in the pound.
At Glaisyers Solicitors LLP this increased investment has led us to open a second office in Mayfair, in addition to our Manchester base, to cope with rising conveyancing demand on high value London properties. Jones Lang LaSalle (JLL) forecasts steady price growth in Prime Central London districts over the coming years, with transaction levels set to increase slightly over the course of 2018, and longer term pricing is expect to nudge upwards with stable growth of 8.7 per cent by 2022.
Our decision to expand into London seemed especially pertinent considering that ongoing trade negotiations may depress domestic demand and lead to the pound falling further, presenting greater buying opportunity for foreign purchasers and encouraging much-needed foreign direct investment into the UK. Which is something that seems even more likely when you consider that Mayfair is currently in the throes of widespread renovation and the former US Navy base, Twenty Grosvenor Square, is due to complete next year and become one of London’s most prestigious addresses.
With the prospect of a no-deal Brexit still on the cards, ultimately the jury is still out on which way demand for UK assets will swing over the next 18 months. Yet so far, in prime central London at least, the UK’s property market is holding onto its strength and resilience in the face of the uncertainty and offering fresh opportunity for European buyers.