Overseas property investment: where from exactly?

Overseas property investment: where from exactly?

Hugh Wade-Jones

It is no secret that a sizeable part of the success of London’s prime property market is due to an influx of property investors from overseas, but it seems to be becoming harder and harder to keep up with where exactly most of the money is flooding in from.

Just in recent months the high net-worth mortgage market has been awash with significant interest from clients in countries such as Libya, Greece, Spain and Italy. And while it also hardly hush-hush that many of these enquiries are as a result of political or economic unrest in the investors’ home countries, not all purchasers are simply looking to place their funds in a perceived safe haven, with the latest raft of wealthy buyers looking to move to escape tax hikes.

You could be forgiven for thinking you have that read that last sentence incorrectly. Many of Britain’s wealthiest individuals may well have long left these shores to take advantage of more favourable tax conditions elsewhere, but so too are moneyed individuals moving to our capital to avoid even more suffocating levies elsewhere. If you haven’t already guessed, the latest foreign invasion is from investors of a Gallic persuasion. Since Francois Hollande swept to victory at France’s presidential elections and announced a series of tax rises for the wealthy – including a 75% top rate and a higher annual wealth tax rate for those with net worth of more than €1.3m – the number of French high net-worth individuals planning to move to London has soared according to property agents, lawyers and wealth managers based in the capital.

Prime property specialist Knight Frank has claimed that sales of top-end real estate to French buyers rose by 40% in the three months to June 2012 compared with the second quarter of 2011, proving how widespread the phenomenon is. London’s proximity to France – and the convenient transport links such as the Eurostar – is undoubtedly an influencing factor to this trend, but with prime property appreciation in London not only greatly outpacing the mainstream market in the UK, but also equivalent capital cities across the continent, the chances are that French investors would have selected London as their preferred destination anyway. Although much of the anecdotal evidence suggests that many of the French buyers are intending to make a London property their primary residence, some price growth never hurts should they wish to up sticks in the future.

It is encouraging for the UK prime property market, the high net-worth mortgage industry and the national economy in general that London remains a desirable destination for wealthy property investors. Although there are countries in the Eurozone that are besieged by far greater problems than the obstacles we are currently facing, we are not without our challenges, so it speaks volumes for the way our markets are perceived that they are still regarded as such a safe bet.

For now though, lenders and brokers willing to capitalise on such high levels of demand from overseas will be keen to make hay while the sun shines, regardless of client nationality. Indeed the only difficult thing to predict at present seems to be exactly which country the next wave of foreign investors are going to originate from.

Hugh Wade-Jones is director of Enness Private Clients