Fresh wave of super-rich looking to buy up London properties, says estate agent
02-09-2014
Political and economic instability driving rise in inquiries from Brazil, Argentina, Ukraine and elsewhere, reckons Frank Knight
The Guardian reported last week that several mansions bought by overseas buyers on The Bishops Avenue, London, had been left empty and were falling into disrepair. Photograph: Graeme Robertson for the Guardian
Reuters The Guardian Rob Booth
Political and financial upheaval in some of the world's largest emerging economies is driving a wave of rich migrants to London to park their wealth in the city's property market, according to data from a leading estate agency.
Knight Frank, a specialist in upmarket properties, said on Friday that online inquiries from Argentina, Ukraine and Turkey have soared during the past year.
"There is potentially a further wave of investment headed for the prime central London property market," said Tom Bill of the firm's residential research team.
The interest comes despite prices in London having already risen sharply after a rush of foreign buyers of the city's mansions, prompted by the eurozone financial crisis and the Arab spring, along with Britain's property taxes.
Prices across the capital in the three months to December were 14.9% higher than a year earlier, figures from mortgage lender Nationwide show. The value of some top-end properties has increased even more, driving prices beyond the reach of most residents and making the property market a political issue.
The chancellor of the exchequer, George Osborne, is to impose a capital gains tax on foreign property investors from 2015 in a bid to allay fears that wealthy overseas buyers are inflating a property bubble.
Inquiries from Brazil about London properties have more than doubled over the past year, according to Knight Frank. The agent said an increase in online traffic translates into a pickup in actual sales within three to six months.
"This doesn't surprise me at all," said Sophie Dworetzsky, a lawyer specialising in wealthy private clients at the law firm Withers. "If you invest in high-end London property you probably feel you have a degree of certainty – it's like a safe currency."
Brazil is one of the so-called "fragile five" economies seen as vulnerable to the US Federal Reserve scaling back monetary stimulus, owing to large current account deficit and reliance on outside capital.
The next biggest increases in inquiries came from Argentina, which in the middle of a currency crisis, and Ukraine, which is reeling from a wave of political unrest. Inquiries from both countries have risen by 67%, according to Frank Knight.
Other members of the fragile five also saw a pickup in internet househunting in London's wealthier neighbourhoods. Inquiries from Indonesia and Turkey, which have both endured weeks of capital flight and falling currencies, rose by 10%, while South African interest climbed by 9% and Indian interest 3%.
London and the top end of its property market is a well established harbour for capital from countries with economic and political instability because of Britain's relative stability and a tax regime that historically goes easy on foreign residents' overseas wealth.
But the issue of foreign property purchases has become political, with many media reports saying expensive houses and flats are often bought only as investments and are left unoccupied. The Guardian reported this week that several mansions on The Bishops Avenue had been left empty and were falling into disrepair.