Another wave of super-rich heading for London
Wealthy migrants from 'fragile five' emerging economies keen to park cash in stable Britain
Political and financial upheaval in some of the world's largest emerging economies is driving a new wave of rich migrants to London's supercharged property market as a place to park their wealth, data from a leading real estate agency shows.
Knight Frank, a specialist in upmarket properties, said it had seen online inquiries about British homes from crisis-hit countries such as Argentina, Ukraine and Turkey soar over the past year.
"There is potentially a further wave of investment headed for the prime central London property market," Tom Bill, associate in the Knight Frank residential research team, said.
This is despite prices in London already having risen sharply after a rush of foreign buyers of London mansions, prompted by the euro-zone debt crisis and the Arab spring, along with Britain's political stability and benign property taxes.
Prices in London overall in the three months to December were 14.9 per cent higher than a year earlier, according to figures from mortgage lender Nationwide, and some top-end values have inflated even more, driving prices in Britain's capital beyond the reach of most residents and making it a hot political topic.
Finance Minister George Osborne said in December he would impose a capital gains tax on foreign property investors from 2015 in a bid to allay fears that wealthy foreign buyers are driving a property bubble.
In the case of Brazil, interest has more than doubled over the 12 months to the end of January, Knight Frank said, adding that an increase in web traffic translates into a pickup in actual sales within three to six months.
The agency, which sells homes worth at least £1 million (HK$12.7 million) and is marketing a 15-bedroom house on The Bishop's Avenue, London's "billionaires row", at £65 million, said the bulk of those inquiries were for homes in the capital.
"This doesn't surprise me at all," said Sophie Dworetzsky, a partner specialising in rich private clients at law firm Withers. "If you invest in high-end London property you probably feel you have a degree of certainty - it's like a safe currency."
The biggest rise in interest came from Brazil, with a 115 per cent increase over the 12 months to the end of January, compared with a year before.
Brazil is one of the so-called "fragile five" economies seen as vulnerable to the US Federal Reserve scaling back monetary stimulus, because of its large current account deficit and reliance on outside capital.
The next biggest increases in inquiries came from Argentina, in the midst of a currency crisis, and Ukraine, which is reeling from a wave of political unrest. Inquiries from both countries were up 67 per cent.
Other members of the fragile five group also saw a pickup in internet house-hunting in London's plushest neighbourhoods. Inquiries from Indonesia and Turkey, which have both endured weeks of capital flight and falling currencies, rose 10 per cent, while South African interest climbed 9 per cent and Indian interest was up 3 per cent.
However the issue of foreign property purchases is politically controversial, with many media reports saying expensive houses and apartments are often bought only as investments and are left unoccupied.