The UK’s exit from the European Union is likely to lead a surge in transaction volumes as investors resume buying prime London property, but an additional 3 per cent stamp duty and higher asking prices could dent sentiment, analysts said.
In a sign that foreign buyers are indeed looking at London property prospects favourably, Hong Kong-listed Far East Consortium on Monday acquired Ensign House, a 4,572-square metre office building in Canary Wharf for £28.25 million (US$36.5 million), which will eventually make way for a mixed-use project.
“There’s a lot of Hong Kong clients that have been window-shopping,” said Chris Harvey, a partner at law firm Mayer Brown London, who met prospective clients in Hong Kong with budgets above £10 million. “They were just waiting for that little bit more of certainty.”
“All the clients that I have seen, about 90 per cent, maybe even more, have said that ‘yes, we will do a deal in the UK now’,” he added.
With Brexit finally coming through after more than three years of uncertainty, there is a renewed interest from some investors who will continue to increase their investment. For others who have never invested in the UK, they feel now is the right time to invest.
In terms of value, £1.3 billion worth of homes priced more than £5 million or more sold in the period, more than double the £557 million recorded in the third quarter, and up 11.3 per cent on the final quarter of 2018.
Investors are also likely to take advantage of a window of opportunity before “the Conservative manifesto proposal of a further 3 per cent stamp duty land tax charge is potentially introduced for non-UK residents,” said Vaughan.
The prevailing buoyant mood in the market, however, might push sellers to raise asking prices, which could crimp transactions.
“I think that because of the demand and supply imbalance and because of the number of buyers who are looking, it is going to be a seller’s market because it’s very competitive buying a prime building in London,” Mayer Brown’s Harvey said. “You’ve got so much competition that the seller gets to choose who they want to sell to.”