The role of foreign investment in shaping London’s property market

Whether it’s an influx of buyers from Hong Kong after the launch of the BNO Visa or savvy investors from India and China who appreciate the value of a London education for their children, the UK capital’s property market is a hotspot for overseas investment. A robust rental market drives the ROI prospect, and appreciating asset value is another driver for overseas property buyers. But how does this interest from outside the UK affect the city’s property markets?

According to a study published by the London School of Economics (LSE), for every 1% increase in the share of residential transactions to foreign entities, the market witnesses a 2.1% increase in house prices. With ownership of London properties worth over £90bn, it’s no surprise that foreign investors play a significant and crucial role in shaping the London property market.

Where are most of the overseas London property buyers from?

According to a recent report in The Times (UK), almost 27% of the total London properties sold in Q1 2024 were acquired by foreign buyers, recording a 3% YoY rise. To gain further insights into the demographic distribution of overseas buyers, we submitted a Freedom of Information request to the Land Registry.

The findings revealed that Hong Kong-based buyers were the largest contingent of overseas homebuyers in 2024. With over 13.5% of the share, Hong Kong was followed by buyers from Singapore (8.2%), USA (6.4%), UAE (5.4%), China (5.2%) and Malaysia (5.1%). Another report revealed that out of the 11% share of Asian buyers in London last year, 40% of those sales were made up by Indian buyers from cities like Mumbai and New Delhi.

Popular areas for overseas investment

Data from the Land Registry and ONS Population Survey have revealed that Prime Central London (PCL) areas such as Kensington, Chelsea, Westminster, and Camden are the most favoured among overseas buyers and also have the most non-UK-born residents. The lifestyle amenities offered in these prestigious neighbourhoods allow foreign investors to maximise ROI by renting and reselling properties.

However, not all overseas buyers have millions to invest in PCL postcodes and have started looking towards Zone 2 and Outer London postcodes such as Southall, Hayes, West Ham, Woolwich, Wandsworth and more. With abundant greenery and improved transport and infrastructure, these investment hotspots are popular regeneration zones that have attracted the country’s top residential developers to take an interest in them.

Types of properties that overseas buyers mostly choose

According to another LSE report, almost 70% of overseas property buyers, mainly from Asia and the Middle East, invest to benefit from the UK Capital’s thriving rental sector that has been growing steadily year-on-year. Accommodating a family member (children studying in universities) or an additional property for work-related trips and holidays are other reasons foreigners purchase a London property.

From luxury properties in Prime Central London’s Mayfair, Kensington and Knightsbridge to modern penthouses and serviced apartments in Canary Wharf or new builds in Nine Elms and Surrey Quays, where Tube extensions have facilitated faster commutes, overseas investment in London is diverse.

Do London properties need overseas investors?

Unlike local homebuyers who may need to move to their new properties within a few months, overseas investors are usually in for the long haul and more readily invest in off-plan schemes that are essential for placemaking in London. Speaking on whether London needs overseas investors, our Director, Marc Von Grundherr, says, “Overseas investors in London’s property market are generally looking for long-term returns, and they put down a deposit two to three years before completion. These advance payments made by overseas investors help developers with the required capital to complete projects and contribute to housebuilding efforts in a big way.”

Emerging trends of foreign property ownership in London

While the number of European overseas buyers has declined by 9% after the UK’s exit from the EU, buyers from Asia and America have significantly increased. Up from 6% in 2023, Asian buyers represented 11% of London’s total foreign property purchases in 2024. Similarly, with the recent change in administration in the US, enquiries by American buyers are also up by 14%. The latest data also reveals that for every absentee foreign investor, there are now 2.7 foreign buyers planning to relocate to the UK, suggesting a changing trend where overseas investors are buying with a long-term plan of putting down roots in the country.

Investing with Benham and Reeves

With 21 branches across London and 14 international offices, we bring the best London properties to overseas buyers. Our legacy of over 65 years in the business has helped us serve thousands of overseas buyers to navigate the London property market successfully. Our services go beyond assisting buyers to find the right property as we strive to guide overseas investors on their London property journey and maximise their returns. From property advice to tax returns, lettings, and even furnishing, we can help you with every aspect of your London property ownership. So, contact us if you want to buy, sell or rent a property in London.