Weak Economy Gives
International Property Investors Green Light
Ironically it is the weakness of Sterling (GBP) that has made residential property in the UK capital attractive to international property investors, helping to fuel strong demand for residential property in London from foreign investors, according to one residential estate agent.
As we previously reported in February international property investors are already targeting high rental yields from rental properties in the UK (read full story here)
The favourable currency exchange rate means that the majority of international property investors and buyers purchasing properties in London are doing so because they perceive the UK housing market to be a safe place to preserve and even improve their own wealth as they face political, economic and financial upheaval in their own domestic property markets.
While residential property demand may have briefly weakened due to the stamp duty increasing to 7% for properties valued over £2 Million (GBP) announced in the 2012 budget, the London market has remained attractive to international buyers seeking a secure and liquid property market in which to invest.
From its peak last June, Sterling (GBP) has dropped more than 11% against currencies like the Euro. This weakness has mitigated the rise in stamp duty and proposed taxation on property held through company structures.
The vulnerability of the UK economy following Moody’s downgrade of UK debt to AA1 is also expected to stimulate further interest from international property investors in the UK property market as a whole.
Residential properties in Greater London are now trading at prices 6% higher than in December 2007, however, there doesn’t appear to be any lack of interest from overseas buyers.
CEO of Winkworth estate agents, Dominic Agace, commented: “There has been for some time, growing interest in prime London properties from international buyers. With a favourable geographic location between the U.S. and Far Eastern time zones, and a track record as a safe investment market, demand will always be high. Meanwhile, supply continues to be constrained by limited space and the difficulty of obtaining planning permission.”
Interest from French buyers increased following
election of President Francois Hollande last year
While many properties are purchased as an investment, there is still an influx of interest from overseas buyers looking to relocate as a family or to find accommodation in Central London for their children while undertaking studies in the Capital.
South Kensington and Notting Hill have remained popular with French, Italian and American buyers, while Knightsbridge, Chelsea and St. John’s Wood are often favoured by buyers from the Middle East, India and China.
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