“Evidently, in the face of significant domestic economic upheaval, the ultra-wealthy still perceive London as an alluring and secure destination for their investments”
– Alpa Bhakta – Butterfield Mortgages Limited
For many years, properties in London’s real estate market have long been a magnetic force, drawing significant amounts of investment from foreign investors in particular.
As noted recently by Savills’ Alex Christian, buyers are “attracted by the lifestyle London offers – a compelling combination of quality schools, culture, green space, history and architecture”.
So attractive is the capital as a destination in which foreign buyers want to invest or live, that official figures from last year show that more than half (57%) of property acquisitions in the capital were made by non-UK residents. Largely, these investments occur in prime central London locations, so the investors tend to be high-net-worth individuals who operate in the market’s higher echelons.
However, significant challenges have emerged in recent years that have made it more difficult for overseas buyers to enter London’s market: higher stamp duty for second homes and non-UK residents; the fallout from the Brexit referendum; the travel restrictions that were implemented during Covid-19 pandemic; and the economic turbulence of the last 19 months are the most significant that come to mind.
Yet, while many of these challenges continue to confront the market, demand from overseas remains strong, and the data suggests that the PCL property market is outperforming the rest of the UK.
PCL robustness stems from its strong international demand
The PCL market has showcased its remarkable staying power over the past year. Despite contending with elevated inflation and a noteworthy rapid ascent in interest rates, price levels have only exhibited a subtle downward correction.
According to Knight Frank’s analysis, prime central London property prices registered a modest 0.9% decline