Foreign winners and losers

//Foreign winners and losers

Foreign winners and losers

A succinct weekly take on the London property market and a roundup of headlines from market observer John Lim. Subscribe to the Friday Roundup here:

  • London mayor Sadiq Khan made headlines recently after he launched an inquiry into foreign property ownership in London, claiming concerns that foreigners are pricing Londoners out of the market. According to a BBC report last year, more than 36,000 properties in London are owned by offshore firms.
  • Unfortunately Mr Khan’s efforts are being undermined by the effects of the Brexit vote, which have put London property further out of the reach of the British while making it more affordable for overseas investors.
  • The pound has fallen to its lowest levels since the 1970s when records began, so foreign buyers now enjoy more than a 20pc discount when denominated in their own currencies.
  • As expected, a number of agencies have reported a surge in interest from overseas: according to property portal, Chinese buyer enquiries for UK properties rose by over a third after the referendum.
  • However, despite currency advantages, not all foreigners find post-Brexit London more attractive. There are fears of a mass exodus of residents who come from the other 27 EU states, with many predicting a fall in interest from Europe.
  • Asian investors, on the other hand, look likely to increase their investment into London. There are other factors at play in addition to the fallen pound: according to research by Goldman Sachs, aging populations in Asian emerging countries – China, Taiwan, South Korea and Thailand – will result in an increase of foreign outflows to USD$2tn over the next 5 years.
  • If we assume that investors buy where there is already an established population of residents of the same origin (as has been observed empirically), then we should expect properties in areas with large Asian populations to outperform those that are more European.
  • I looked at the 2011 Census data to find out which boroughs have the largest Asian and European populations.
  • Top three boroughs with the most proportion of EU residents: Kensington and Chelsea, Haringey, and Westminster.
  • Top three boroughs with the most proportion of residents from Asia (China, Taiwan, South Korean and Thailand): Kingston upon Thames, Tower Hamlets, and Camden.

Here’s a roundup of what we think are the big news stories this week:

  • PM Theresa May has bowed to parliamentary pressure and allowed lawmakers to vote on her Brexit plan, prompting the pound to surge by the most in three months against the dollar.
  • Dutch lender ING is planning to move as many as 60 trading jobs from Amsterdam and Brussels to London to consolidate operations and cut costs, bucking the current trend of firms threatening to move the other way post-Brexit.
  • The number of properties available to rent in Prime Central London has trebled over the last three months, according to a market audit by investment house London Central Portfolio.
  • Amazon Property has shed some light on the buyers for the sold-out first phase of its flagship The Park Crescent scheme. Over 80% of buyers were from the UK, with a noticeable glut of “super-downsizers” trading in London mansions for the apartments.
  • Research by proptech research firm Datscha found that Qatar sovereign wealth fund QIA is the largest property owner by land size in London at almost 23m sq ft, over thrice the size of the land owned by the Crown Estate (7.3m sq ft).
  • Homebuyer demand has picked up in September for the first time in seven months, according to a new survey by the Royal Institution of Chartered Surveyors.

And finally…

  • The British have suffered the first major casualties of the Brexit vote. Products including Marmite, Pot Noodle, and Ben and Jerry’s ice cream have been pulled from the shelves of major supermarket Tesco due to the fallen pound.
By | 2017-09-20T20:00:19+00:00 October 14th, 2016|Friday Roundup|0 Comments