Foreign buyers continue to target new homes in London
Posted 6 September 2013 by Keith Osborne
Overseas property purchasers have acquired between 65% and 70% of the new-build homes in prime London over the past two years, fresh research from Chesterton Humberts shows. High international demand has helped to keep the new-build sector buoyant, helping to drive up prices in the process.
The research shows that new-build residential prices in London rose by 56.3% between the first quarter of 2009 and second quarter of 2013.
In addition to the Chinese, Russian and Middle Eastern lifestyle buyers that have previously driven the market, Chesterton Humberts has noticed a rise in buyers from these countries looking primarily for investment purposes. The company has also identified a number of new nationalities that are becoming more active in the London property market, including Nigerians, French and Greeks, due to political strife, economic difficulties and tax threats to personal wealth.
London's established safe-haven status, combined with its legal transparency and the good long-term performance of its property market, means that it features on many international buyers' wish lists.
Price growth has been particularly strong over the past few years with Nationwide reporting that average new-build capital values have risen by 47.7% since 2009, while the average premium for luxury new-build property in London can be anything from 10-15% and in some cases considerably higher.
Chesterton Humberts' head of international residential developments, Samuel Warren, highlighted that there was £2.2bn of investment in luxury new-build homes last year and expects this figure will be exceeded this year.
He said: "With demand for prime new-build properties set to remain robust and new supply struggling to keep up, we expect investment volumes will be higher this year than last. The relative weakness of sterling means that many overseas buyers can achieve effective discounts on purchase price whilst acquiring an asset that will almost certainly appreciate considerably over time and which they will have little difficulty in selling when the time comes."