But exactly why is UK property such an attractive prospect for Hong Kong-based investors?
Hong Kong Investment in the UK
The keyword here is sustainability. The unrest taking place in Hong Kong dates back as far back as last summer when national security law became an issue of serious concern after the government proposed a contentious extradition bill. Conflict continues in the region with ongoing, often-violent protests against a potential loss of autonomy despite the bill being withdrawn.
Against this unstable political backdrop and turbulent series of events, Boris Johnson offered three million Hong Kong residents a path to UK citizenship, reinforcing the security and safety of our nation’s reputation as an international safe haven in the eyes of Hong Kong investors.
With the view to establishing a long-term plan should unrest in their home nation continue, investors from Hong Kong are increasingly seeking out UK property for the reliable, steady market and as place where they can safeguard their money and escape volatility.
Solid Economic Fundamentals
While Brexit and COVID-19 have inevitably caused some level of recession in the global markets that will resonate until at least the end of 2020, the UK economy remains one of the most solid in the world while the nation itself boasts an established range of factors that attract consistent tourism and investment for a positive knock-on effect on the property markets, supply and demand.
Investors are increasingly looking for ways to protect their assets against an uncertain economic future and UK property has historically offered stable, consistent returns and a healthy balance of supply and demand for high yields in the long-term. We also boast a resilient market that has recovered well from previous recessions and looks set to recover even more quickly this time around, providing a much sought-after lifeline during a dark time.
As a leading business player in the global game, the UK also boasts solid judicial and tax systems and world-renowned higher education institutions. It is also highly-sought-after for its prime location within easy reach of the rest of Europe and with unparalleled national and international travel links.
Upwards and Outwards
Hong Kong investors are flocking to the UK market in their droves with some London agencies reporting double the number of new buyers this past summer compared to the same period in 2019. An exciting development is also taking place as investors are taking a wider approach to their property interests.
While enquiries in high-end properties with price tags of £2m+ still reign strong and Hong Kong buyers have risen to the become the fifth largest foreign investors in central London in the past 12 months, investors are increasingly looking at properties in less elite London boroughs as well as those valued at below £500,000 and established properties as opposed to purely new builds.
Estate agencies are also reporting increased interest from HK buyers in buy to let properties in the North of England, when historically interest has been heavily focused in the capital. Investors are looking further afield in cities such as Manchester, Birmingham, Liverpool and Bristol where buy to let offers cheaper options with solid returns in a growing market.
Properties with a lower price tag are also being sought after by investors who are investing in the UK market for the first time and want to make a more low-key commitment. The northern towns and cities also represent a prime opportunity for those looking for more diversification as the markets are consistently outperforming London with high yields and a positive long-term outlook.
As we continue to see the effects of COVID-19 unfold, we anticipate the level of Hong Kong buyer interest in the UK market to increase at a solid rate. The new citizenship program and the stamp duty holiday will both have positive effects on overseas investment rates with the latter meaning non-UK-resident buyers can now save as much as £15,000 through the tax holiday.
In addition, with the stamp duty land tax overseas-buyer 2% surcharge coming into play in April 2021, foreign investors will be looking to take advantage of the cost savings sooner rather than later. The stamp duty holiday itself is set to increase annual property price growth by around 1.5%, adding extra appeal to an already attractive market.
Favourable currency exchange rates have also contributed to increased interest from foreign buyers while the UK market currently has extremely competitive mortgage interest rates. The Hong Kong dollar has been performing strongly in comparison to the pound sterling – with Hong Kong properties among some of the most expensive in the world, these factors couple together to create a huge draw for investors.
We are witnessing the positive impact of this trend right here at Alesco Property – our high-end development at Carnaby Place is now entirely sold out and 50% of the sales were completed by investors based in Hong Kong. With the unrest in Hong Kong showing no signs of abating and the UK market growing stronger all the time, overseas investors will be flocking to the market now more than ever to take advantage of these prime and reliable investment opportunities.
Overseas investment in turn will support our economy in its recovery for a further boost to the property markets that is likely to attract even more investment in a solid full circle. This all goes to show that, even during the most difficult times, the UK property market remains prestigious, safe and secure in the minds of overseas investors.
For more information on the range of opportunities available, contact our expert team today who will talk you through your personal investment ambitions and identify the most appropriate developments that we have on our books.