The UK’s vote to leave the EU shook London’s real estate market, inciting a great deal of uncertainty and causing a number of ongoing property deals to stall or be renegotiated.
But in the nervous months since the vote, some overseas investors have seen it as a buying opportunity. Middle Eastern investors have a long history of owning property in London, while Asian buyers — many of whom entered the UK real estate market after the 2008 financial crisis — have also been seeking to buy post-referendum.
But, what exactly are overseas property investors looking for in London? Despite the more obvious requirements: a central location, good local amenities and value for money, buying a property is becoming much more than that. Today’s foreign investors are seeking to buy into the entire lifestyle offered by a home, not just the property itself.
Particularly important to many overseas investors is the business centre facility, due to the rise of what is called the “bleisure” market, a new term describing a mix of business and leisure. According to research, serviced apartments are soon set to become an established asset class as demand for the sector grows.
Offering a business centre allows frequent corporate travellers from any part of the world to benefit from the UK’s central location. This facility is in high demand as it minimises disruption from various time zones and eliminates the need to be office-based, providing more flexibility and increased productivity.
This requirement, driven by the changing nature of the workplace, is why many of the more forward-thinking developers are seeking to add value to luxury apartments at a time when some properties in central London have seen prices drop by up to 20 per cent.
There is also a growing desire from investors to indulge in hotel-style living. This trend for luxury living is something these buyers have become accustomed in the UAE, where this hotel-inspired lifestyle is much more common. We have certainly seen over the past few years that to remain competitive in the London property market, particularly in homes targeted at a high-level clientele, developers and agents need to ensure that their new developments offer these facilities as an added benefit for potential buyers.
The facilities we are receiving high demand for include a 24-hour concierge service, private leisure and health club access and communal spaces such as a library or business centre.
However, not only do residents of these kinds of developments want 24-hour access to everything at their fingertips, they also require a central location that is well-served by public transport and within London’s most iconic and sought-after addresses.
Locations such as Bayswater have proven particularly popular due to its proximity to the iconic Whiteleys Shopping Centre, in the same way that a property located around the corner from famous addresses such as Sloane Square or Bond Street would receive significant uplift and appeal to high level clientele.
To benefit from the luxury hotel lifestyle that is so popular in current times, we have found many common trends in the properties that are most popular with Middle Eastern investors. Firstly, they tend to prefer two- to three-bed properties, with a preference for a high floor, perhaps due to enhanced views of the city.
They will also often pay extra for on-site amenities such as those already mentioned and have a penchant for mansion blocks.
Areas that appear to be particularly attractive for investment include Bayswater, Queensway, Paddington and Kensington. Paddington in particular is becoming even more popular because of the soon to arrive Crossrail service and the Heathrow Express service taking only 15 minutes to the airport.
Although many investors will be looking for a second home to complement their frequent “bleisure” commitments, we also see buyers purchasing for family members who may be needing accommodation for studies, in which luxury facilities are still seen as a huge draw.
Despite uncertainty in international markets and the prospect of a post-Brexit world, we can be reassured by the continuing strength of the industry. For as long as developers and agents continue to work together to offer buyers good value from a property that truly compliments their lifestyle, we are likely to remain in a good position to continue benefiting from overseas investment in the UK property market.
The writer is Managing Director of Fraser & Co.