Brexit Bargains: Best Places To Invest In UK Property For 2020

Hong Kong Tatler 發布於 2019年11月12日06:22 • Nick Ferguson

Overseas property buyers are sensing an opportunity as the UK says au revoir to the European Union

With the UK still struggling to grasp the full repercussions of Brexit and prime minister Boris Johnson’s leadership, its UK property market is looking increasingly attractive to foreign investors thanks to the country’s weak currency—and the prospect of snapping up some Brexit bargains has not escaped the attention of high-net-worth Hong Kong buyers.

“We’ve seen a huge influx of enquiries and an increase in super and prime London deals being done from Hong Kong and China,” says Mark Elliott, head of international residential for Savills.

A recent Savills study calculated that a Hong Kong buyer purchasing a London property that would have cost £5 million at the peak of the market in 2014, before changes to stamp duty rates, could now buy at a discount of 33 per cent, thanks to the divergence between the pound and the US dollar, to which the Hong Kong dollar is pegged.

See also: Food For Thought: What It's Like To Invest In The Restaurant Industry In Hong Kong

Prime minister Boris Johnson

We have seen a huge influx of enquiries and an increase in super and prime London deals being done from Hong Kong and China – Boris Johnson

Some property specialists claim even bigger discounts. “The current status of the pound means that for dollar-denominated buyers, prime London property is about 40 per cent cheaper than it was in 2014,” says Katherine O’Shea of Coutts Real Estate Investment Service.

Prime properties are defined as homes valued at between £1 million and £10 million, while anything above that is classed as super-prime.

While these properties are currently priced at steep discounts compared to five years ago, they could have even further to fall. The Bank of England’s worst case scenario for Brexit predicted a 35 per cent drop in house prices. Such an extreme outcome is very unlikely, but a few doubt that prices will head downward—especially in dollar terms.

On the face of it, this seems like a great time to buy luxury property in London. Sales are at a six-year low, properties are staying on the market for more than six months and buyers are getting almost 13 per cent off the asking price on average, according to Coutts.

But Elliott says that there are some potential challenges that buyers should be aware of. “You would think it would be a buyers’ market with what you hear in the press and on the ground locally,” he says. “But the reality we see is very different.”

Egerton Crescent in Kensington, which was considered the most expensive street in Britain in 2013

A big part of the problem is the lack of supply coming through the planning pipeline. Elliott says there are two reasons for this: development funding is harder to obtain from banks, and local councils are less willing to grant planning permission.

At the top of the market, in locations such as South Kensington, Mayfair and Marylebone, wealthy buyers are starting to pay closer attention to the asking price and developers are no longer offering the same kinds of discounts they were a year ago.

In addition to a lower supply of new-build properties, private sellers are also contributing to the supply squeeze. “Many people have built a lot of equity over the last 10 years and are therefore in a strong position when it comes to pricing and discount,” says Elliott. “They are not forced to transact and can afford to hold.”

Of course, these factors are also part of what makes prime and super-prime London properties attractive—there are generally always plenty of potential buyers. Through thick, thin and Brexit, it appears that a desirable property in Mayfair at today’s prices still has excellent growth potential.

See also: 5 Luxury London Hotel Openings In 2019

Discover some of the best locations to invest in UK property market for 2020:

Central London

A row of colourful houses in Notting Hill

This is home to all of London’s traditional prime neighbourhoods, including salubrious haunts such as Belgravia, Chelsea, Kensington, Knightsbridge, Marylebone and Mayfair, as well as Notting Hill.

Prices here have fallen by 3.6 per cent in local currency terms during the past year, according to Savills, suggesting there may be some opportunities to buy at relatively attractive prices, though Mayfair is still the most expensive area in the capital, with prime property going for more than £2,000 per square foot on average.

North and east London

Wapping (Photo: Getty Images)

This area comprises well-established Islington, the more up-and-coming neighbourhoods of Shoreditch and Wapping, and the area around the secondary financial district of Canary Wharf. Prices here have fallen by 2 per cent during the past year.

North-west London

The neighbourhood of Hampstead in north-west London

Lying just to the north of Marylebone, the core prime neighbourhoods are the north-west districts of St John’s Wood, Maida Vale, Primrose Hill and Hampstead. Prices here have fallen by more than in any other areas, down 3.7 per cent, though there are some outliers—Hampstead, for example, has bucked the overall trend and has actually seen prices rise recently.

South-west London

The town of Richmond (Photo: Getty Images

Prices have dropped less dramatically the further you get from prime central London, with south-west London the only area that has actually seen prices grow during the past year, albeit by just 0.7 per cent, driven by areas such as leafy Richmond.

Other neighbourhoods in this quarter of the city include Wimbledon, Putney, Barnes, Clapham and Battersea, home to the Malaysianfunded conversion of Battersea Power Station into luxury apartments that have proved popular with Asian buyers.

Beyond London: Birmingham

One of the many canals around Birmingham (Photo: Barcroft Media via Getty Images)

Many international buyers never look past London, but the UK’s second-largest city of Birmingham is an increasingly popular option for those who do. Prices have risen “aggressively” during the past few years, says Mark Elliott from Savills, driven by retail investors looking for value that isn’t available in London. But there is still room for more growth.

With the £1.5 billion regeneration of the former Smithfield wholesale markets site, a potential high-speed rail connection to London and the Commonwealth Games in 2022, Birmingham is expected to attract growing overseas investment during the next year or two.

See also: 5 Steps To Successfully Turn Your Passion Into An Investment