Updated: Aug 18, 2022
In Ludgrove's last article we looked at how many Hong Kong citizens may settle in London in the wake of the Government's British National Overseas (BNO) visa scheme for HK citizens. We concluded that the arrival of HK citizens is likely to offset the negative impact of Covid on Londons' population and dampen the notion that London property prices are set to dive as inner cities depopulate in the coming years.
But what about the value of UK, London and Prime Central London property for Hong Kong buyers? Hong Kong property prices have grown dramatically over the last few years and if you are selling a Hong Kong property to move to the UK, where does the value lie? Or where is the most opportunistic "switch"? Our CEO and former Fund Manager Fraser Slater takes a look.
Since mid 2014, Hong Kong property prices have been on a tear with values having grown by some 50%. Over the same time, average UK property prices have grown by 37% and London property by 28%. Selling a Hong Kong property and buying a London property therefore offers better value than acquiring the average UK property. However the real value lies in selling a Hong Kong property and buying a property in Prime Central London (PCL) where prices have fallen 12% over the last 6 years. Here the vendor of a HK home would be buying into PCL 41% cheaper than 2014 levels - such has been the effect of Brexit uncertainty, the (now distant) threat of a hard left government, tax changes and Covid:
We have excluded tax changes (stamp duty) and currency from the above. However if we adjusted for tax this would pare the discount back by 5% to -36%. And if we included currency changes this would widen the discount to a staggering -59% for a HK homeowner.
However what if you are not a Hong Kong property owner who has benefitted from the boom in local house prices? What if you are a Hong Kong tenant (of which there are many) looking to move to the UK? Does PCL property still offer value? Below we have looked at the change in PCL property prices, adjusting for inflation, currency and taxes (stamp duty). Here we can see the PCL market is 42% cheaper than it was 6 years ago - something we feel that won't be lost on the many shrewd HK buyers soon to arrive in Britain.
About: Ludgrove is a research-driven London property buying agency, sourcing properties for home-owners, investors, family offices and developers. The company is the only UK buying agency that conducts in-depth research into the Prime London property market and their research regularly features in The Times, Forbes Magazine, Property Week, PrimeResi, Mansion Global and others. As well as conducting searches for homeowners, Ludgrove sources and appraises off-market apartment blocks and development opportunities, adding considerable value to Investors and Developers. The agency is ranked one of the top UK buying agencies by Prime Resi. CEO and Founder Fraser Slater is a former Real Estate Analyst and Fund Manager. His former fund WDB Capital was one of the best performing Funds in Europe during the Financial Crisis. Co-Founder Isabella Slater is an interior designer.
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Disclaimer: Ludgrove Property Limited is not authorised or regulated by the Financial Conduct Authority (FCA) and we do not provide any financial or investment advice. We recommend that any property investor seeks appropriate professional advice before entering into any contract, and we would also advise that the value of any investment can go down as well as up and that you might not get back what you put in. You may have difficulty selling a property investment at a reasonable price and in some circumstances it might be difficult to sell at any price. We would urge you not to invest unless you have carefully thought about whether you can afford it and whether it is right for you, and if necessary to consult with a professional advisor in accordance with the Financial Services and Markets Act 2000. All information is provided strictly as a guide only, is subject to change without prior notice and does not constitute an offer of investment. The Ludgrove website should not be regarded as an offer or solicitation to conduct investment business, as defined by the Financial Services and Markets Act 2000. Investors who are resident in or citizens of countries other than the United Kingdom may be subject to local restrictions. In particular, no offer or invitation is made to any US persons (being residents of the United States of America or partnerships or corporations organised under the laws of the United States of America or any state, territory or possession thereof), who are excluded from the services offered in this site. The information on this website and our publications has been obtained from sources which we believe to be reliable and accurate, but without further investigation this cannot be warranted.