I spend a lot of my time travelling to the Far East to meet and advise foreign investors who are buying or investing in property in the UK. Even for an experienced investor there is still always a lot for them to consider when investing in the UK. In particular the various changes to the tax system in the UK over the last two years have meant that investors have needed to take a long hard look at the opportunities. This has made my last 5 trips particularly interesting and I thought I would share some of the things that I have learned.
London is still a priority for foreign investors but not perhaps as much as it was
There was a time when foreign investors with money to spend would turn to London first when looking to invest in property abroad. The attractions were i) rising property prices, ii) stable economy; (iii) stable political system; (iv) fair court system, and (v) attractive tax system. Whilst many of these attractions still exist today I have found that buyers are hesitating on London. The main reason being that it is perceived that London is a bubble that could burst and it is no longer guaranteed that the investment will prosper. Further, Central London has now become so expensive (and stamp duty has risen dramatically on expensive properties) meaning that even the wealthiest are unsure whether to part with so much money in London. Anything outside of Central London is seen as an “unknown quantity” and investors are less likely to take the risk. The changing tax system also means that foreign investors are not sure of reaping the financial rewards that they were. There is also competition from other countries and cities. For example, foreign investors are now eligible for residency in Portugal if they invest €500,000 in the country. The attraction of residency for Asian investors in the European Union is significant.
Having said that above London still ranks high on the list of any investor in Asia looking to invest outside of that continent. London has a safe economy and political system. House prices are expensive but the commercial worth of the city means that house prices at a worst will be stable or slowly rise. London is also a “must have” for property developers building their business brand. Having a property in London is something that will add to the value and awareness of their business. I have also noticed that Asian investors are willing to consider projects outside of Central London with much more enthusiasm than they were previously. In my view, London is still a great place to invest your money. There are not many other cities in the world that can offer foreign investors what London does on so many levels (i.e. politically, economically and socially).
Immigration and Education are also big drivers for Asian investors
Many of the investors I meet when travelling in Asia are property developers or property investors who invest for commercial purposes. I have found it very interesting to see how the High Net-Worth individual market is growing and developing in China. Accountants and wealth managers are very busy advising these clients on both investments in China and abroad. They tell me that the driver for many of their clients is either immigration or education. From an immigration perspective, the investors are seeking to invest enough to meet the guidelines for residency in the UK. The UK remains the country in Europe that Asian investors would like to have residency. From an education perspective, an increasing number of wealthy families are sending their children to the UK for education, either at boarding school or university. Well known UK boarding school’s such as Eton and Windsor are very popular choices for the wealthy in Asia. The families often look for property near to where their children are studying and need advice on how best to purchase property in the UK.
These are just some of my thoughts from my trips and I will share further thoughts with you over the coming weeks and months…