Samir Salya on Overseas Investment in London

With recent changes to the London property market, sales in the region have dropped in recent months. The uncertainty of Brexit and recent changes to Stamp Duty are serving as main detractors, being particularly seen among local buyers. With the fall in competition and prices, more overseas investors are investing in the London property market. As buyers from the East flock to London, the capital is witnessing record levels of overseas investment.

Increasing investment from the East

In figures released by real estate agency CBRE, investment in central London offices grew by 26% by the end of 2017. This took the final figure to £16.4 billion, with £3.5 billion coming in the final quarter of the year. With these figures, the property marker looked to be showing some signs of recovery.

Around 81% of this total investment volume came from overseas, according to CBRE. Of this, Asian buyers made up over half of this total. This accounted for £6.9 billion. As overseas investors continue to account for a large portion of the market, these buyers are spearheading the move towards recovery.

Notable purchases by overseas investors

2017 saw the sale of 2 of London’s biggest skyscrapers by overseas investors, with buyers coming from Hong Kong. The sale of the Leadenhall Building, nicknamed the ‘Cheesegrater’, to Hong Kong-listed developer CC Land came through in March 2017 for $1.2 billion. Likewise, 20 Fenchurch Street, known as the ‘Walkie-Talkie’, was sold to herbal medicine maker LKK Health Products the following July. Both these sales helped contribute to a total spend of £5.9 billion on London offices by investors from Hong Kong.

Potential competition and worry for the capital

Despite the interest in the capital, high prices in London are threatening to cost the city some investors. Other major cities in the UK are now beginning to attract more attention, due to their cheaper prices, good links and thriving businesses. As cities such as Birmingham and Manchester rise, there is increasing worry that London may miss out on potential business.

Speaking to City AM, the Head of International Capital Markets at real estate agency CBRE, Chris Brett, states: “London has been a focal point for global investors since recovering from the financial crisis, with interest reaching a new high peaking in 2017. Increasingly over the course of the last 12 months, we have seen this wave of investment into London pushing capital into more affordable, up-and-coming cities like Manchester and Birmingham, as some investors are unable to compete with the international money coming into London.”

It is uncertain now how this will affect London in the long-term, but with more competition and an unstable market, it looks clear that London’s property problems are not over.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.