The City of London property market remains a magnate for overseas real estate investment despite Brexit and is particularly popular with buyers from South East Asia.
New research shows that the location has witnessed significant capital inflows since the referendum in June despite an initial pause for breath. Since the vote, approximately £2.5 billion of transactions have taken place in the City, with over 80% attributable to overseas purchasers.
The City has witnessed unprecedented capital inflows from Southeast Asia, particularly the Greater China region, accounting for 30% of all acquisitions since the vote and with another £500 million currently under offer, according to the latest analysis report from international real estate firm Knight Frank.
Its City Capital Markets team has advised on approximately £900 million of transactions since the referendum giving the team a dominant market share of 35% and in the last two months alone, Knight Frank has advised on eight transactions totalling approximately £450 million including the sale of 10 Fenchurch Street, 2 Moorgate and 3 Harbour Exchange and the recent acquisitions of 20 Moorgate and 98 Fetter Lane.
‘Riding on last year’s strong momentum, Chinese outbound capital continues to play an instrumental part in the global real estate markets. In particular, Knight Frank has seen strong interest from Chinese banks, developers and conglomerates largely using Hong Kong as a portal,’ said Nick Braybrook, head of City Capital Markets at Knight Frank.
‘Despite the slowdown in investment activity in the City, just after the referendum, the subsequent surge of overseas buyers means there is now a distinct shortage of available investments as the market needs more sellers,’ he pointed out.
The firm says that the sale of 10 Fenchurch Street for £80 million to a first time Chinese buyer is proof that predicting buyers in today’s market is challenging and reinforces the need for far reaching marketing campaigns. The wide marketing process for the building saw 80% of interest come from South East Asia, with 30% of those investors being first time buyers.
Moving forward into next year, Knight Frank expects London to remain the focus, with the weak pound attracting opportunistic buyers and a distinct sense of urgency from buyers to enter the market.
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