Spanish buyers behind London property boom
02-17-2014
London attracts Spanish property investors London attracts Spanish property investors PHOTO: Flickr/@doug88888
Spanish investors see London property as a ‘safe haven’ for their money, research from Saïd Business School at the University of Oxford proves. Professor Tarun Ramadorai and Dr Cristian Badarinza found a direct correlation between economic and political risks in Spain and house price changes in particular areas of the British capital.
The researchers found that recent economic difficulties have left those with capital to invest avoiding the risks of the economy at home and turning to high-profile foreign cities like London as a ‘safe haven’. This goes a long way towards explaining why London house prices have continued to rise at a disproportionate rate compared with those in the rest of the UK and sheds light on the well-known fact that capital appears to flow ‘uphill’ from relatively poor to relatively rich countries.
Ramadorai said: “The seeming invulnerability of London’s property market has long been assumed to be a result of its status as a ‘safe haven’ – an investment location in which assets will retain or even increase their value in the face of turbulence in other parts of the world. The granular level at which we have analysed the data allows us to confirm that safe haven demand effects from Spain and the rest of Southern Europe, like Italy and Portugal, are indeed important factors in explaining the dynamics of London house prices.”
The study at Saïd Business School found that London areas with relatively lower average income levels experienced price appreciation following uncertainty in Spain over the past two decades – showing it isn’t just billionaires insuring against economic and political uncertainty at home.
Badarinza said: “The key is the high proportion of those from certain countries that live in one area. There are strong, important indicators in cities that have a high proportion of ethnic diversity, and can be seen as a safe haven, for a direct link between political risks in Spain and capital investment in wealthy, foreign cities around the world.”
SOURCE: BlueSky PR