Since the start of 2009, Hong Kong’s housing prices have increased over 70 percent, making it the world’s most expensive place to buy and apartment, despite the efforts of the Chinese government to curb real estate speculation. But the red-hot market is still on fire—so what’s a real estate investor to do? The answer for many Hong Kong investors: go to London.
Asian buyers are currently dominating the market for new homes in central London, capitalizing on the weakness of the pound and the avoiding the skyrocketing real estate prices at home.
“It’s a currency play,” said Liam Baily, Knight Frank’s had of residential research. “Most of the purchases are for an investment, because London is seen as a good place to put money.”
In the past two months, Asian investors—specifically investors from Hong Kong and Singapore, both of which are experiencing rapidly expanding economies—have snapped up £120 million, or $194 million in US dollars, in London real estate. Most purchases range between £400,000 and £1 million.
“They want clean, crisp, new properties so that they can have a decent rental investment or a decent place to stay when they are in town,” said Sebastian Warner, a partner at Knight Frank.
Hong Kong investors accounted for 24 percent of all purchases of newly-built properties in London, giving it a larger market share than any other Asian country. Singapore takes second place in the market with 12 percent of new home purchases, and mainland China falls third with 10 percent of the market.
While Hong Kong’s 70-percent increase in housing prices since 2009 is a staggering example of the growth of Asian markets, Singapore and mainland China are also high-growth areas. Singapore housing prices have reached record highs, and based on the first three months, the island’s economy is expected to grow 23.5 percent this year. On mainland China, home prices rose 28 percent in Beijing and 26 percent in Shanghai last year, according to SouFun Holdings Ltd., the company behind China’s largest real-estate website.
As these economies are proliferating, the British pound has decreased about 25 percent of its value since the British housing market reached its zenith in the third quarter of 2009.
“The exchange rate is crucial,” said Warner. “On the other side of the coin, the markets are incredibly hot.”