Hong Kong takes second place in London market
Singaporeans top the list of foreign buyers of new properties but the growing middle classes in mainland China may soon catch up
Hongkongers are the second-biggest overseas buyers for new properties in London after Singaporeans, a survey shows.
People from overseas bought £2.2 billion (HK$25.8 billion) worth of newly built property in central London last year, up 22 per cent from 2011, a report by property consultancy Knight Frank said yesterday.
Buyers represented a total of 52 nationalities. Those from Singapore accounted for 23 per cent of overseas transactions. Hong Kong accounted for 16 per cent, while those from mainland China accounted for 5 per cent and Malaysians 4 per cent.
Knight Frank expected the biggest growth in demand for London property in future to come from mainland China.
"There has long been talk of a surge in investment in London property from China as the rising middle classes look for alternative investment opportunities, but this has yet to fully materialise," the report said.
Knight Frank forecast a strong medium-term outlook for demand from mainlanders, but said it might take some time for restrictions on overseas investment to be eased, which would open up overseas property markets to more mainland Chinese investors.
Last year, overseas buyers invested £9.6 billion, the highest figure on record, in the overall property market, generating nearly 70 per cent of total sales.
This is the fifth consecutive year that foreign investors have accounted for the majority of investment purchases by volume.
Stephen Clifton, the investment partner at Knight Frank, said: "Foreign buyers dominating the London office investment market has become an established state of affairs.
"The pound has weakened further in recent weeks, which only increases the logic for overseas investors to buy in London. Also, pricing looks attractive compared with their home markets in many cases."
Some overseas buyers, especially those from Asia, are more comfortable with the idea of buying a property off-plan as this practice more closely reflects the property market in their own countries.
This trend had had an important impact on the market in London, allowing developers to secure funding in a housing market largely starved of development finance, Knight Frank said.