Hong Kong investors are biggest spenders on UK property
Asian buyers make London the world's most traded city, despite Brexit concerns.
In spite of gloomy predictions about the economic impact of Brexit, the UK's real estate market was the most active in Europe during the first quarter of 2017.
A new report from global real estate services firm JLL reveals that UK was the world's most traded city over the period, rising from third place last year before the EU Referendum took place.
UK real estate transaction volumes were also at their highest level since 2015, largely thanks to Asian buyers making the most of the opportunity to snap up overseas properties at discounted prices.
UK property discounts of up to 16 percent
According to JLL's Head of Research for Global Capital Markets, David Green-Morgan, Asian investors are unshaken by the uncertainty surrounding Brexit and remain confident about the UK real estate market.
“With the sterling depreciation and slight drop in capital values, Asian investors – particularly private buyers from Hong Kong and China – have been the most active in London since last year's Brexit vote,” he says.
“The depreciation and capital values drop means that UK commercial real estate is now discounted by 16 percent on average to overseas capital since the June 2016 referendum. The net yield of City prime buildings is also very attractive.”
Hong Kong buyers spent almost US$3 billion on UK properties in Q1 2017 – nearly US$1.3 billion more than global funds and all other foreign groups combined as well as a substantial increase from US$842 million in Q1 2016. The most sought-after investment properties were offices in London’s City and West End.
London residential prices to rise in 2018
As for London's housing markets, buyers from emerging economies such as Turkey and Thailand also took advantage of the weakened pound to buy properties in the final quarter of 2016.
JLL is forecasting a stable year ahead for London’s residential markets as they continue to recover.
House prices should remain relatively flat through 2017 before rising again next year, making now the ideal time to purchase property in the British capital.
In fact, sales and lettings are predicted to grow at such a rapid rate in the next few years that by 2019 there will be no one-bedroom flats below £200,000 in London.
US property also popular with Asian investors
Similar to the UK, Asian buyers were also found to be the most active in the US – another market shaken by political and economic uncertainties.
“In line with recent trends, Asian buyers were among the most active investors in the US, with investors from Singapore, Japan and China driving most activity,” Green-Morgan says.
“Investors from Singapore and Japan acquired offices in New York, Boston and Washington DC, as they renewed their focus on core assets in global gateway cities.”
Find out more in JLL's Q1 2017 report
JLL’s Global Capital Flows – Q1 2017 report offers further insights on how dynamic international markets fared over the last quarter, including detailed breakdowns of real estate volumes, transactions and cross-border investments.