Why overseas investors love London property

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London property investment guide for overseas investors

London. It’s a great place to live, work and do business. The city attracts professionals and students from all over the world. It’s full of history and culture as well as educational and business opportunities. It’s cosmopolitan, multi-cultural and welcoming to people from different countries and continents.

But for overseas investors, London is so much more than that. It lies at the heart of a country that has a strong and resilient economy, combining history and culture with unrivalled business and educational opportunities.

Why does London property attract so much investment from international buyers? Of course, it’s the city’s unique character. But London is also incredibly resilient. The city has survived economic crises and recessions, terrorism, pandemics, Brexit. And it’s not just weathered these storms, it’s come back stronger than ever.

So it’s hard to underestimate the importance of London’s reputation as a safe haven in an ever-changing and sometimes volatile world, in its ability to deliver both long-term capital growth and excellent rental income.

Diversification

A diverse mix of asset classes is the cornerstone of any good portfolio. And for overseas investors, London property represents an opportunity to invest away from their local market, spread their portfolio risk and diversify into an asset class that has consistently outperformed investments in shares and commodities over the long term.

A thriving economy

London is an international hub for business – from finance heavyweights such as Bloomberg, McKinsey and Wells Fargo, to tech giants such as Google, Facebook (Meta), Amazon and Apple and not forgetting the dynamic start-up sector, with small and medium-sized businesses also thriving in this vibrant city.

Transparent legal and financial systems

The UK’s robust and transparent legal system has become a byword for trust amongst international investors while tax and financial systems inspire confidence, particularly at times of wider uncertainty.

Low interest rates

Interest rates in the UK have been at a historical low for many years now and while they are starting to edge up a little, the cost of borrowing remains very low. Add to this the continuing weakness of sterling, with international investors taking advantage of cheap borrowing, and current exchange rates mean that investors can find exceptional value.

The best education system in the world

London’s universities are world leaders and international students make a bee-line for the city as they seek to gain a first-class education. Universities including Imperial College, University College London (UCL), King’s College London, the London School of Economics and Political Science (LSE) and Queen Mary University of London, are amongst the most renowned educational establishments in the world.

And most of the students attending these prestigious universities, rent a property while they are here. Some parents may buy a property for their student child to live in, while others rent a flat close to their university and these students tend to have good budgets.

A strong rental market for buy-to-let investors

Because of its strong business reputation, London is always popular as a location to live and work. Overseas professionals (from Europe, the US, South East Asia, China, Hong Kong, the Middle East and Australia) flock here to advance their careers, joining leading international companies. Most of these professionals choose to rent, so demand for rental accommodation in London is consistently strong.

With severe housing shortages, demand for homes outstrips supply and is likely to continue to do so, pushing up rents. Apartments usually let quickly, meaning shorter void periods and a good rental yield for landlords (typically 3% - 5%).

And with London’s population continuing to grow (and predicted to rise by a further 37% over the next 30 years), demand for rental properties looks set to remain strong.

Large scale regeneration projects

The last few years have seen London at the heart of a number of large scale regeneration projects, which have transformed the city’s skyline. From Canary Wharf and East London, to Battersea Power Station, Nine Elms and Vauxhall, from London Dock and Surrey Quays to Royal Woolwich Arsenal, whole areas of the city have been rebuilt and transformed into vibrant new communities, often mixing stunning homes with commercial and retail premises, creating vibrant hubs where young professionals can live and work.

These residential developments and regenerated neighbourhoods are now very much at the top of renters’ wish lists and where rental demand is strongest.

Ambitious infrastructure projects

Part of this city-wide regeneration are a number of transport infrastructure projects which are making the daily commute a lot easier and quicker than ever before. Crossrail/the Elizabeth Line, is shortening journey times into central London and the Northern Line tube line extension to Nine Elms and Battersea Power Station are both part of ambitious transport plans in the capital that have opened up extensive areas which were previously hard to commute from.

Interested in buying London property?

If you are considering buying a property in one of the world’s greatest capital cities, either a buy-to-let apartment aimed at generating income or a pied-a-terre for your own use, please get in touch with your local office. You can have an informal chat about your ideas and get a specialist’s view of which areas offer the best value and would best suit your needs.