Lost property: where have London’s overseas buyers gone?
Despite the weak pound, foreign investors are staying away
It has been almost a decade since the first apartments at Battersea Power Station went on sale. Such was the excitement about its redevelopment that buyers queued in the chilly dawn for the chance to pick up a £343,000 studio flat or a £6 million penthouse. Most were from overseas, and in four days in January 2013 they collectively spent £600 million.
These kinds of scenes are something London’s housebuilders and estate agents can today only dream of. Although we have moved on from worst ravages of the pandemic, and traveller numbers are very much in recovery, many foreign property buyers – for years the mainstay of prime London’s property market – remain missing in action.
According to research by real estate fund Alliance Fund, overseas buyers were at their busiest in prime London in 2018, responsible for 35 per cent of all sales and collectively spending an estimated £15 billion. This was, naturally, great news for estate agents’ commissions, but less thrilling for Londoners who coined the phrase ‘lights out London’ to describe swathes of the capital bought up and left empty by absentee owners.
In 2020, during the first onslaught of Covid-19, international buyers faded away. Unsurprisingly, as the world locked down, the number of deals fell – from around 31,000 in 2018 to just over 22,000. The total spend dipped to less than £11 billion.
But since then – despite restrictions lifting and travel resuming – interest from foreign buyers has remained distinctly muted. In 2021 they bought 23 per cent of prime London properties, spending just over £12 billion. And in the first half of this year their buyer share was down to 19 per cent, and a total spend of £3.2 billion.
Simon Tollit, partner at Tedworth Property, agrees that today’s market is very different to the cash-happy spending frenzy by international buyers which pulled London out of the doldrums between 2011 and 2014. ‘We are not at a time when people just paid whatever they had to, they are not coming over with blank cheques,’ he says. ‘They are viewing things from a very considered, sensible perspective, and there is at the moment a gulf between what vendors think their properties are worth and what buyers are willing to pay.’
Tollit thinks that the pandemic has wrought long-term changes on buyer requirements, too. ‘People have put down roots where they have been living for the past couple of years, and of course if they are looking to buy London is not their only option,’ he says. ‘Dubai is offering a ten-year “Golden Visa” to buyers right now, and the tax position there is more appealing.’