Hongkongers splash out on London property as Boris Johnson’s visa offer, weak pound buoy market
- Teow Leong Seng, President & CEO of Eco World International Berhad, says low sterling has made UK property prices ‘much more affordable’
- Developer sold US$25 million of London property to Hong Kong buyers in May and expects sales to rise further
“It has been very encouraging for us in Hong Kong,” said Teow Leong Seng, President & CEO of Eco World International Berhad (EWI). “The present low sterling makes property prices in the UK very much more affordable for international investors.”
The properties sold over the three weekends in May ranged in value from £500,000 to over £1 million.
“Hongkongers have always been very savvy property investors and they have long been invested in London – the recent proposed changes to the UK visa system in favour of Hongkongers certainly adds to the many reasons they may already have to buy a property there,” said Teow.
For Hongkongers fearing for their way of life, Britain will provide an alternative
The offer has angered China, which says Britain has no right to make the offer to Chinese nationals.
While the prospect of further immigration rights may have helped stir interest in London property, analysts said Hongkongers were probably more motivated by diversifying their investments as Hong Kong had become very expensive.
“[Overseas buying is] more like a natural diversification as the Hong Kong Monetary Authority and government have made it very costly, in terms of tax and down payment requirements, to buy flats in Hong Kong. [Flats are] becoming rather large ticket items where the minimum is probably over US$500,000,” said Jonas Kan at Daiwa Capital Markets Hong Kong.
“There is more talk about emigration but I do not think people buy because they want to emigrate to the UK,” Kan added.
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Kan said in “the grand scheme of things” a sizeable portion of domestic money was still being put into newly built homes in Hong Kong. He said about US$25 billion had been spent in Hong Kong’s primary property market last year, while total bank deposits were US$1.5 trillion.
“London is among the most popular places for Hong Kong people in terms of investments. The interest is there though the total amount involved is not yet too large relative to the domestic pie,” said Kan.
Hong Kong buyers generally prefer to buy properties in London that have access to the subway. EWI said Hong Kong buyers currently made up 20 per cent of its customer base and the company expects that figure to grow.
Teow said London appealed because it was seen as the world capital for property investment and had a reputation for a “great quality of life” and a transparent legal system. Adding to its appeal was that rents continued to grow even in the worst of times, while employment and education opportunities were plentiful and many Hongkongers had family living there, he said.
To capitalise on the interest, EWI is planning to show more property projects in Hong Kong.
“This coming weekend, we are also bringing a brand new block of apartments located in East London to be previewed in Hong Kong before we show it elsewhere,” said Teow.
Named Oxbow, the projects offers homes inspired by the original warehouses of the East India Dock in East London.
Prices start from £340,000 for a studio unit measuring 420 square feet.
EWI will show another project named The Wardian, which faces Canary Wharf and has views of the River Thames.
Prices range from £440,000 to £1.58 million, with penthouses from £1.85 million to £2.4 million. Sizes range from 394 square feet to 1,270 square feet.
The project is more than 80 per cent sold and will be handed over to customers this August.
Analyst Kan said Hong Kong buyers were also interested in properties in the cities of Birmingham and Liverpool but with much lower price tags.
EWI’s Teow said the company had received many enquiries about projects in Greater Kuala Lumpur and the Malaysian states of Penang and Johor.
Projects in those areas would be exhibited in Hong Kong over the coming months, he said.
Wealthy Chinese fret about Hong Kong’s status as safe haven for investment
“There is a great variety of Chinese food available in every town and city, the cost of living is low and affordable and world class quality health care is widely available,” said Teow.
Also, Malaysian property prices were a fraction of those in Hong Kong, he said.
In a survey of luxury property in 28 cities across the globe by Savills Prime Index, Kuala Lumpur was the cheapest. Prime properties in the city cost less than US$500 per square foot compared with US$4,610 per square foot in Hong Kong.
