Asian Investors are now buying more than a fifth of all central London new-build properties, and account for 49% of all investment purchases in central London (this compares to only 36% purchased by UK investors), according to a report by Knight Frank.
Liam Bailey, head of residential research, says: ‘The revival of international investment demand for new-build property has been one of the most remarkable features of the residential property market over the past 18 months. While the market has returned to life, after it pretty much shut-down in 2008, current international investment demand is almost totally concentrated on London and is primarily coming from Asia.
‘Of the 7,595 new-build properties completed in the 12 months to March 2010, 41% of these were bought by investors rather than owner occupiers.
‘49% of all investors in the 12 months to March 2010 were Asian, 11% were from China/Hong Kong, 10% from Singapore, and 7% Malaysia.’
Knight Frank estimates that over the last 12 months the total volume of Asian investment has totalled £761 million. They attribute growth to the weaker pound and rising rents in the capital. Despite recent price rises, they are still 32% lower compared to their peak March 2008 level for someone wishing to buy using Hong Kong dollars as a result of currency movements.
‘As Asian domestic markets show their own signs of difficulties, Chinese buyers in particular are keen to spread their exposure and invest in markets they regard as more secure than their own if they can get through the regulatory minefield and release the funds,’ says Mr Bailey. ‘We cannot underestimate the role of UK education in encouraging inward investment into London; over the past decade the number of Asian students studying in UK universities has risen by 175%. The strongest growth comes from Chinese, Indian and Pakistani nationals. The number of Chinese studying in the UK rose from 4,017 in 1998/99 to 47,035 in 2008/09. In many cases Asian investors look to buy to cover the period of their child’s university duration and then retain as an investment.’
