LONDON: Hong Kong investors grabbed a growing share of newly built homes in London over the past 12 months, consolidating their ranking as the biggest group of overseas buyers in the market.
The strength of demand today is greater than in the 1990s, when the first great wave of Hong Kong property investment hit London, estate agents say.
According to estate agency Knight Frank, 24% of off-plan purchasers in the 11 boroughs of inner London came from Hong Kong over the past 12 months. This is one-third higher than in the year to June 2010, when they accounted for 16% of the market.
Some of this increase is down to mainland investors buying London property at exhibitions in Hong Kong, though most buyers are from Hong Kong itself.
"As wealth in some regions of mainland China increases, more money is being filtered through Hong Kong where the sales process is easier," says Seb Warner, Asia regional director at Knight Frank's international project marketing team.
Many mainland investors do not buy at Hong Kong exhibitions, though, and these investors bought 10% of new homes sold in inner London boroughs like Westminster and Islington over the past 12 months, Knight Frank figures show.
Hong Kong-based purchasers are Knight Frank's biggest group of international buyers in London's new build market. Estate agencies Hamptons International and CB Richard Ellis report the same.
Hong Kong investors were making the most of the weakness of the pound to buy homes at affordable prices, with many using equity from the strong Hong Kong housing market to fund purchases, said Warner. Homes are being bought to accommodate children studying in London, and as investments.
At some developments, Hong Kong buyers have bought most apartments offered for sale. At 18 Alie St, on the eastern edge of the City of London, where a block of 25 apartments will be completed in March 2012, 15 of the buyers were from Hong Kong and the remainder from Singapore, say the project's sales agents, Hamptons International. The starting price for the apartments was £315,000 (RM1.56 million). At 2 Hyde Park Square, on the north side of Hyde Park, 16% of apartments have been sold to Hong Kong buyers at prices ranging from £1,500 to £2,000 per square foot by sales agents Savills.
"This is a bigger trend than the mid-90s," said Warner. "The future of this trend depends heavily on the exchange rate and the Hong Kong economy, but I cannot foresee it reversing in the short term."
Darien Bradshaw, executive director, international project marketing, at CB Richard Ellis, estimates that 2,100 London flats were sold off-plan at exhibitions in Asia last year, with 60%, or some 1,260 homes, sold in Hong Kong. He estimates that a further 500 or so have been sold so far this year.
The Hong Kong investors are buying property in a growing variety of locations.
Traditionally, prime central London districts and Docklands developments caught their eye, and while they continue to invest heavily in these areas, they are also venturing into less salubrious areas such as Hackney and Deptford. Chinese off-plan investors focus most heavily on the Isle of Dogs in the Docklands.
Also, unlike in the 1990s, some Hong Kong buyers are buying older properties. Buyers' agent Russell Hunt helped a Hong Kong client buy a 1,200 sq ft mansion block flat near Baker Street at £1,000 per square foot, to use as a family pied-a-terre because he wanted something "more English".
Struggling Irish buy-to-let vendors are also seeking Hong Kong buyers for their properties. Robert Hadfield, of investment property management agents Pineflat, said many Irish owners of London property wanted to sell so they could cover liabilities in Ireland. — SCMP
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