Punitive property taxes in the East are prompting Asia’s super-rich to purchase property in the West, according to private bankers.
Property prices in the West surged in value as emerging economies have invested capital.
Presently, London’s property market is reaching levels seen before the financial crisis. Hot-spot properties there are, on average, GBP 3000 per square foot, according to Channel News Asia.
A report by Citi Private Bank and Knight Frank correlated restrictions in the East with a 12 per cent rise in prime London property value, while Shanghai and Singapore prices dropped 3.4 per cent and almost 5 per cent.
British market strength has been unaffected by government’s raising of stamp duty on luxury homes.
Tim Bowering, managing director of Global Real Estate Investments at Citi Private Bank said: “From Asian clients we’ve seen over the last 18months an increase in investor demand in the UK for both commercial and residential markets – they’re buying for capital growth and as a safe haven.”
Hong Kong investors are going ‘Ga-ga’ – paying over GBP 8million to reside in the same neighbourhood as Lady Gaga.
“The first allocation was sold out within three days in Hong Kong,” said Daniel Van Gelder, co-founder of Exemplar Properties.
London’s Fitzrovia district encompasses the new mixed-use development, Fitzroy Palace – comprising 237 private apartments and 200,000 sq ft of office space.
Developer, Exemplar Properties confirmed that unit prices range from GBP 605,000 and 8.5million.
UK buyers will purchase around 50 per cent of the units, followed by East Asians at around 15-20 per cent of the total sales market.
After their sell-out in Hong Kong, Exemplar Properties is now in Singapore; on the second stint of their Asian roadshow.
Van Gelder said: “Already interest from Singaporean buyers has been huge.” Twenty units have been sold, ahead of the exhibition.
Charles Leigh, senior director with CBRE London said: “When I, with pound sterling, walk into an estate agency, I’m probably paying about ten per cent more than I was at the peak. When somebody walks in with Singapore dollars, they’re paying 40 per cent less.”
Foreign investors are interested in purchasing commercial properties in London and Europe for low prices.
Over the next 18-24months Bowering believes the distressed market will continue to grow as there are many properties now coming up for renewal of their debt terms.
UK authorities increased stamp duty by two per cent for properties over GBP 2million
The two per cent raise of stamp duty on properties over GBP 2million is not expected to deter investors. Analysts predict that London property prices will remain steady because of the city’s tight supply, according to Channel News Asia.