Spending spree led by Russians Chinese, Americans, Emiratis and Indians looking for safe haven investments
Wealthy foreigners bought more than half of London’s most expensive homes sold over the past year.
A foreign spending spree, led by Russians, Chinese, Americans, Emiratis and Indians, resulted in the number of overseas buyers overtaking the number of Britons buying London properties worth more than £2m in the 12 months to April 2013, according to new research by estate agent Knight Frank.
Liam Bailey, Knight Frank’s head of residential research, said wealthy foreigners were increasingly attracted to buying luxury London property as a “safe haven investment” at times of political turmoil in their home countries.
He added that the collapse in value of the pound against rival currencies had made “owning luxury homes in the capital more appealing”.
“The key issue which has propelled London prices over recent years has been an appetite from global purchasers for tangible investments,” he said. “Add in ultra-low interest rates, together with the fact that not only is London outside the eurozone but the pound is weak, and you have the perfect ingredients for that heady cocktail – the safe haven investment.”
Bailey said foreigners’ appetite for London’s best housing stock had helped push up the average price of prime central London property by 57% over the past four years. Prices are predicted to increase by a further 26% by 2018.
The increase at the high end has filtered down to push up the price of all properties in the capital, making it harder for first-time buyers to get on to the property ladder.
Russians bought 8.5% of all London properties worth more than £2m between March 2012 and March 2013, followed by buyers from the United Arab Emirates, US and China, with each accounting for 2.8%. Buyers from eurozone countries accounted for 9.5% – figures were not provided for individual countries. India accounted for 2.6%, Hong Kong 1.8%, and Switzerland 1.1%.
Almost 1% of £2m+ properties were sold to people from Burma, just a year after the country’s military junta was officially dissolved.
There was a 16% fall in the number of £2m-£3m properties sold in the capital over the period, which agents attributed to the increase in stamp duty on sales of property above £2m from 5% to 7% and the introduction of a 15% charge on sales through offshore companies. However, the number of sales above £3m remained steady, suggesting the richest buyers have not been put off by the stamp duty rise.