SPECIAL REPORT: Overseas-born buyers are shaping London’s prime housing markets according to significant new research, and here are three key trends to underline that face.
London is a cosmopolitan city which has built its success on immigration and international trade. According to the research from real estate firm Savills some 37 percent of all Londoners were born overseas.
As long as London remains an attractive place to live, work, invest and learn, it continues to draw people from across the globe. It is therefore no surprise, according to Savills, that overseas-born buyers of all kinds are shaping London’s housing markets.
This is particularly the case in London’s highly visible (but comparatively small) prime property markets, where budgets are higher and purchasing habits dictated by discretion as well as need.
Reading some headlines however, you may be forgiven for thinking that swathes of London’s housing stock are being bought absentee, buy-to-leave landlords from outside the United Kingdom. These stories draw on figures on the very upper echelons of London’s housing markets – and that’s a tiny proportion of London as a whole. It would be the same, for example, as defining the entire Bangkok property market by sales of landed properties in the capital.
They also overlook London’s role as a global city and the people from around the world that choose to make London their home.
While non-UK buyers made up 40 percent of the prime London resales market in 2014, prime London accounts for just 8 percent of the total London residential market. Therefore, taking the market in its entirety, non-UK buyers of prime property made up just 3.2 percent of all London transactions in 2014, reported Savills.
Of these, 84 percent were purchasing their main residence, a figure not dissimilar to U.K. buyers also active in the prime market, at 91 percent.
London: Three trends
Savills analysed its data on the purchasers of prime London property and highlighted three key trends. Its findings illustrate how people from other countries bring their lifestyle preferences and home market characteristics into London.
The prevalence of new build, high-rise apartments in Asia, for example, means those buyers feel comfortable with the same product in London. Extended families and generous space standards at home mean that a lot of Middle Eastern buyers seek something quite different.
It is interesting to note those nationalities with a long tradition of buying in London, notably North Americans and Europeans, tend to buy properties most similar to those favoured by many Londoners.
This is an important strategy for buyers of all nations to consider when it comes to resale. A distinctly ‘London’ product is more likely to find a second-hand market than something designed specifically for one particular overseas market.
Brits are the number one buying group everywhere
British buyers are the dominant purchasing group in every prime London region. Taken across the whole of the London market, non-U.K. buyers of prime property made up only 3.2 percent of all London groups cluster for a multitude of reasons. French buyers are concentrated in Southwest London, particularly around the lycées of Kensington and Fulham, for example. For the wealthy Russian buyers, address is paramount and prime central London locations are favoured.
Purchasing power varies by global region
Buyers from Middle East and North Africa spent the most on average on prime London resale property (£4.7 million per property) and prime new build (£4.4 million per property) in 2014/15. The average purchase price of prime London resale property among U.K buyers – who make up the majority of prime London – was £2 million in 2014/15, and £1.6 million for new build.
MENA buys big, Pacific Asia buys small
Those used to large properties at home seek more space in London. Buyers from the Middle
East and the Americas (MENA) purchase the biggest homes in prime London on average, according to Savills. Buyers from Pacific Asia and China bought smaller properties on average.
City-living in the home markets is characterised by high-rise apartments.
To read to full Savills The World and London research report click here.
