Hong Kong buyers expect further declines in London home prices, delay investment
- Investor confidence in commercial property remains relatively strong, with prices expected to remain stable
Hong Kong investors expect further declines in the prices of London homes because of uncertainty around Brexit, and are delaying investment, according to industry experts.
Chris Harvey, a partner at law firm Mayer Brown London, said that depending on the area, residential prices in London had dropped by between 10 per cent and 20 per cent, with the luxury segment slumping by more than 20 per cent. He added that Hong Kong property investors were, therefore, waiting for further discounts.
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Investor confidence in commercial property, however, remained relatively strong and prices were expected to remain stable. “I don’t think we will continue to see a massive appreciation in prices. I think there's going to be a period of prices just being relatively stable,” he said in an interview.
Harvey met Hong Kong-listed companies and investors in the city last week about properties in the UK capital.
Patrick Wong Tsu-an, the chief executive of Hong Kong-based holding company Tenacity International, said the “residential sector will be hit by falling oil prices, and Brexit has made investors cautious”.
“I am still confident about the commercial property sector, but we are hoping for clarity on the Brexit issue,” he added. His company bought two commercial properties at 50 and 70 Gracechurch Street in London for a total of about £400 million in the past two years.
Data from Real Capital Analytics shows investment from Hong Kong, including institutional, private, and public, fell by more than half from US$8.09 billion in 2017 to US$2.98 billion in 2018 as negotiations over the terms of the UK’s exit from the EU turned fraught.