Future of London Property Market

The London property market was the strongest it had been since before the Brexit referendum. It is one of the most popular destination with international investors until recently, when activity slowed due to the Covid-19 pandemic that has affected almost the entire world. Despite this, majority of these investors still view London property market as a safe haven.

There are no restrictions on foreign ownership of residential property in the United Kingdom (UK). Property ownership in the UK can be done through a personal individual where the non-resident owns the property in their personal name or as an offshore company where the foreign investor owns the shares in a company incorporated outside of the UK which in turn owns the property.

Turning Point For London Housing Market

The victory of the Conservative Party from the general election in December 2019 provided the much-needed political clarity. True to its word, the Tory government brought UK out of the European Union on January 31, 2020.

With the Brexit being a done deal, both buyers and sellers seemed to be more confident of the market, taking away some of the uncertainty that has shrouded the UK property market. Average prices in the capital went up to an average of £612,500 in January from £401,000 in the previous month. At that time, UK house prices were expected to continue to rise with a return to growth in the capital’s prime neighbourhoods.

Several multimillion-pound mega deals had been completed in London since. Of which, in January 2020, Cheung Chung-kiu, a Chinese property magnate swiftly paid a record price in excess of £200m for a mansion on Rutland Gate in Knightsbridge, making the property the most expensive sold in the UK. The 7-storey property spreads across 62,000 sq ft and features approximately 45 rooms, a swimming pool, a health spa, gym as well as underground parking.

This is a testament to the renewed confidence that investors have on London’s prime property market. Overseas buyers should note that this is a window of opportunity to enter the UK market before the introduction of 2% stamp duty land tax surcharge in April 2021 that is payable by non-UK residents for property purchases.

Opportunities in the Market

There are some exciting areas with major regeneration in the pipeline to watch. Old sites are breathed life with new developments, turning them into a range of liveable residences and highly-functional amenities.

For many, the go-to option is still a Zone 1 address. Given the prime location, living in Central London comes with a premium but global investors are happy to invest, for the ease and convenience of being located near some of the capital’s top attractions and the extensive infrastructure, on top of the future capital appreciation potentials.

At this prestigious postcode is a 2.66-acre site which used to be an under-occupied, temporary car park. It was sold in 2015 to Berkeley Homes and will see 652 new homes from the planned mix-use development. The West End Gate, situated on Edgware Road, is arranged across a series of mansion blocks with a tower element to the south end of the site, along with different commercial and retail components. One of the phases, Garrett Mansions consisting of one-, two- and three-bedroom apartments was snapped up after its first release in 2018.

West End Gate, one of the largest regeneration scheme of its kind in Marylebone, Central London

The development is near the Paddington Station which will be served by the 75-mile high-speed Elizabeth line upon its planned completion in 2021, further adding to the property values with the prospect of a more integrated Tube network. Prices for the development starts from £642,000 while average home prices at Paddington is £1,055,555.

In terms of foreign exchange, the Pound Sterling has lost some grounds to Singdollar since the Global Financial Crisis. Based on statistics from the Monetary Authority of Singapore, £1 is now equivalent to S$1.7665, down 11.7% from April 2015 when it was worth S$2.0000. In other words, a £1 million residential property now costs S$1,766,500 to buy, which translates to attractive savings for Singaporean investors.

With clarity emerging around Brexit, property analysts had expected the sales volumes in prime central London to strengthen, subject to the implementation of the Brexit deal, the wider economy and future tax changes. This will likely have a favourable spill over effect on residential real estate at the fringe of the city. However, the emergence of Covid-19 put a pause to everything. The way it is affecting the property industry will have a lasting impact on how home sales are conducted in future. This includes how property viewings are conducted for the indefinite future, adopting technology and creative techniques to match dynamic consumer needs.

Find out more on the opportunities that London has to offer.