A new Knight Frank report shows stronger capital inflows than ever – particularly from Asia
“The five stages of grief according to psychiatrist, Elisabeth Kübler-Ross, are denial, anger, depression, bargaining, and acceptance. In 2016, Brexit brought all five to the Central London investment market.”
This is how Knight Frank’s Anthony Duggan, Head of Capital Markets Research and Anthony Barnard, Head of West End Investment, explain last years events in The London Report – 2017.
2016 was no doubt a politically tumultuous year for the UK. Following the shock UK leave vote, which left many jaws on the floor, the market proceeded to anger, followed by a brief bargaining period along with a spattering of depression. Now at a stage of acceptance – or stabilisation, asset values have recovered, even surpassing pre-Brexit prices.
More: UK property is still top for Chinese buyers, with a few differences
Indeed, in the weeks following the vote, Knight Frank received more requests from Asian investors looking to take advantage of the devalued sterling than in the previous 12 months together. This whoosh of action led to Q4’s transaction volume, the strongest quarter of the year valued at GBP4.2 billion (USD5.2 billion).
“Indeed, the currency advantage that resulted from the outcome of the referendum has made the UK in general even more attractive to these buyers.” Nicholas Holt, Head of Research, Knight Frank Asia-Pacific said. “Looking forward, given the continued drive for diversification, we expect the UK’s capital, which boasts strong liquidity and a robust economy, to remain high on Chinese and Hong Kong investors’ wish lists.”
Overall the Knight Frank report shows strong capital inflows since the referendum, despite an initial slow-down immediately after the vote. 80 percent of capital invested in the city comes from outside Europe, with China and Hong Kong accounting for most of this. In the coming year, China’s renewed capital controls is expected to slow outflows as mechanisms to move money become increasingly restricted, but Knight Frank still predict Chinese investment in London to continue.
On the global stage, London remains a leader for real estate. Last year, 73% of transactions in the capital involved an overseas buyer. This compares to 40% in New York City, 33% in Paris and 65% in Singapore.