There is a substantial availability of prime and super-prime property across London. The capital remains an area of high interest for many international investors. Most people think the demand for this premium type of stock is only in central locations as this is historically where prime property investors have been investing in.
However, this has been changing. There are proving to be popular hotspots of prime property in areas of outer London as well. Investors have stretched prime London out of its traditional home in the central parts of the city. Outer areas of London have become particularly appealing to investors particularly since the COVID-19 pandemic. But many in the industry feel this will continue moving forward and is not expected to stop post-COVID.
East London and parts of Greater London that have not usually been viewed as premium are seeing a lot of prime demand from international investors. Canary Wharf in particular has become an expanding property investment hotspot with numerous business offices and headquarters, a growing number of lifestyle and cultural offerings and transformative regeneration.
Areas seeing dramatic transformation and continued development and investment are the parts of London seeing some of the strongest growth within the capital’s property market. These parts of the city are providing a plethora of property investment opportunities for prime international investors.
Increasing Demand from International Investors
In the London property market, demand from Asia and Middle East-based property investors have surged in recent years. In January 2021, the UK government launched the Hong Kong British National Overseas visa scheme, which has led to more Hong Kong investors buying up properties in the capital and some may even plan on moving to the UK.
Throughout the COVID-19 pandemic and global travel restrictions, it was naturally more challenging for international investors to purchase property in London. This led to activity from overseas buyers being subdued. Now that nearly all restrictions have been eased in the UK, this has caused demand in property from international investors to increase again. Pent-up overseas demand is being released across the capital. And there is likely to be a further rise in interest from international investors in the coming months as well.
Recently, the government further relaxed travel restrictions for England, limiting the number of countries where travellers have to quarantine from. Now, only seven countries are on the red list. This is making it easier for international investors from across the globe to visit the UK and view properties in-person that they’re interested in investing in.
And even though an additional 2% stamp duty surcharge came into effect from April 2021 for overseas buyers, this isn’t expected to stop the majority of international investors for a number of reasons. This includes the favourable exchange rates, historically low interest rates, future growth prospects and growing demand.
4 Reasons to Invest in the London Property Market
There’s a strong confidence surrounding the London property market. It has been considered a consistent safe haven for many international investors and has an alluring status and attractive convenience that make this global city a top choice for many overseas investors. And this will likely continue to be the case moving forward.
Housing market remains resilient
Even in political and economic uncertainty, the London property market as a whole has remained strong and resilient. Since the EU referendum in 2016, there has been a rise in international investors snapping up property in the capital.
The sector has also been successfully bouncing back from the COVID-19 pandemic and subsequent lockdowns – even to record-breaking levels. Despite the recent adversity, the sales and lettings markets have both been surging in recent months. This is continuing to make the London property market attractive for international investors.
Positive capital growth prospects
London is being forecast to see positive capital growth prospects in the coming years. Knight Frank has predicted house price growth in prime outer London to remain steady over the next five years at between 4% to 5%. By the end of the year, it forecasts property prices in prime outer London to grow by nearly 4%, which is double the rate for prime central London.
In Knight Frank’s prime predictions, prime outer London is considered to include Riverside, Richmond, Hampstead, Fulham, Clapham, Chiswick, Canary Wharf, Battersea and Barnes. These areas also often provide more space than central areas, which has become particularly important post-COVID.
Additionally, with the need for more housing in London and across the UK, house price increases have been underpinned by surging demand and a growing population. As there continues to be a supply and demand imbalance, this provides a positive outlook for capital appreciation in the years to come.
Strong rental demand and yields
In certain areas of London, rental yields are projected to remain strong as well. Areas with continuing growth in employment prospects and new developments and investment are expected to see increasing rental demand.
With more professionals returning to the office as lockdown restrictions have lifted, this is boosting demand and rents in the capital’s rental market. At Chestertons, we are forecasting rents in prime London to increase by 2.5% in 2022 and 2.0% in the following three years.
Quality of homes available
London is home to a range of housing stock with the quality of properties that appeal to international investors looking for prime and super-prime properties. And international investment is helping to bring forward more high-quality new-build developments across the capital.
There are even a number of off-plan opportunities that can allow international investors to maximise their return on investment and take advantage of lower upfront costs. At Chestertons, we have numerous new-build and off-plan properties available across London.