- Asian Buyers Snap Up Half of New London Homes (Wall Street Journal, Jan 22, 2013):
If you’ve just moved into a newly built apartment in central London, don’t be perplexed if your neighbors speak mostly Chinese.
Market-cooling measures in Asia have helped fuel interest in London’s real estate market—long a popular destination for property buyers on the prowl, says property consultancy Knight Frank. Last year, overseas buyers spent $3.5 billion on apartments undergoing construction in central London, up 22% from the year earlier.
Together, buyers from Singapore and Hong Kong snapped up nearly 40% of all such apartments in central London. Adding in buyers from Malaysia and mainland China, Asian buyers accounted for roughly half of all purchases. By comparison, U.K. buyers made up just 27% of all purchases of apartments under construction, according to Knight Frank’s latest figures. Such figures were generally consistent with those seen in 2011.
Among overseas buyers, more than two-thirds bought for investment purposes, says Knight Frank, while another third said they were motivated to buy for a child enrolled at a local university.
The implementation of cooling measures across parts of Asia in recent years may have encouraged buyers to spend more in London, as cities from Beijing to Hong Kong have slapped extra taxes and restrictions on short-term speculators and those seeking to buy additional properties. Such measures have “acted as a spur for many potential investors to look at overseas markets,” says Nicholas Holt, Asia-Pacific research director.
The developer of London’s Battersea Power Station residential complex says it is making a deliberate attempt to ensure that buyers of the first wave of its apartments—which went on sale this month—will be a balanced mix of locals and expatriates. “We want as many as we can,” says Battersea Power Station Development Company CEO Rob Tincknell of U.K. buyers, saying that the company is adjusting its sale strategy to try and obtain the right combination of residents. Out of the 800 apartments for sale, 600 have already been sold, he says—about half those to U.K. buyers—with construction to begin in the second half of 2013.
Recently Mr. Tincknell has been touring various cities in Asia to promote sales of the development. Over the course of a three-day exhibition in Singapore this month, some 1,000 people showed up, he says. The company is organizing a similar exhibition in Hong Kong this weekend, and expects the remaining apartments will be sold off soon.
When it comes to Hong Kong buyers in particular, Mr. Tincknell says, it isn’t surprising that they gravitate so strongly toward London. “The fact that our legal system is the same makes a huge difference,” he says of the former British colony. “The connection between London and Hong Kong is very close.”