Real estate in the UK is continuously attracting more buyers, as not only foreign investors but also local buyers are incentivised by the favourable mortgage lending conditions. As a result, the number of interested buyers has reached a five-year high and the number of active potential buyers registered with estate agencies has increased by 40% compared to the same period last year.
Over the past 12 months, investors from Russia have purchased around 8.5% of London real estate worth more than £ 2 million. Clients from UAE, USA and China accounted for 2.8% of transactions each, Indian clients for 2.6%, Hong Kong clients for 1.8% and Swiss clients for 1.1%. These clients are typically buying investment property, residential property for their children and second family homes.
Nationwide, prices on the existing homes market rose by 2.8% in the last year, while in London this rose to 7.6%, both in central London and its outskirts. In the first five months average prices in London rose by 3.2%, in April to 0.7% and in May to 0.4%.
With properties worth more than £ 2 million, half were acquired by foreign clients and the most active investors were from Russia, China, America and the UAE. In addition to the steady price increase, the low exchange rate of the pound sterling against a basket of major currencies was an undoubted advantage.
The combination of high demand and limited supply for real estate in Central London contributes to the increase of prices per square foot. While recently in the “golden” districts of Central London the price per square foot amounted to £ 2,000 (about £ 22,222 per square metre), today it is within the range of £ 4,000 – £ 5,000 per square foot (£ 44,444 – £ 55,555 per square metre). Of course, the price depends not only on the area but, among other things, on the view, quality of design and land tenure.
The market is also affected by the fact that fewer sellers are willing to reduce real estate prices. The number of properties worth up to £ 1 million on which sellers made a reduction dropped from 27% to 18% over the last year, which is a three-year low. As for premium property in the UK, deals were concluded at discounted prices in only 8.7% of cases.
After the Stamp Duty increase for properties valued over £ 2 million, experts say that the number of transactions with properties in the price range of £ 2 – £ 3 million reduced by 16%. At the same time, the number of real estate transactions in the price range over £ 3 million remained stable. This is due to the fact that in addition to those factors already mentioned – favourable mortgage lending conditions and the low exchange rate of the pound sterling – many clients are interested not just in investing in real estate in London but also considering the city as a possible place of residence, and therefore purchasing property that has the potential to become a second family home.
As we have mentioned in previous reports, experts predict an average increase in property prices in Central London of 30% over the next 4-5 years. After five months this opinion remains unchanged.
Commercial property in Central London particularly attracts foreign investors. Clients are primarily interested in the most sought-after properties located in the very prestigious areas and streets of the British capital. Such properties are sold off market and are not mentioned on any Internet resources or offered by real estate offices. The most significant deal of the last two months was the sale of an office building in Mayfair, one of the most desirable areas of London. The building, with an area of 16,723 square metres, located at 20 Grosvenor Square near the U.S. Embassy, was sold for about £ 250 million and will be fully refurbished by the new owner.
Inessa Falina, Head of Property Services
Sources: www.ft.com, www.propertywire.com, www.hometrack.co.uk, www.cbre.eu, www.rightmove.co.uk, www.thisismoney.co.uk, www.moneywise.co.uk, www.prian.ru, www.knightfrank.com, www.rg.ru, www.dailymail.com, www.euromag.ru, www.londonlovesbusiness.com, www.guardian.co.uk, www.bloomberg.com,
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