The weaker pound following recent political announcements and events reflects investor fears for the UK economy. A potential consequence of this fall in sterling is making London a more attractive proposition for foreign investors seeking to buy in the prime residential market.

Bargain hunt

While investments in commercial real estate are typically for the future rather than the present, high-end residential can often be an acquisition for immediate accommodation needs as well as a safe deposit or income producing asset. International investors will be looking at London with more interest in the short to medium term as analysts do not envisage significant upward movement in the pound anytime soon.

Crucially, it is against the dollar that the pound has fallen considerably against over the last year regardless of the more recent volatility. The United States had the most high-net-worth individuals (HNWIs) in the world in 2021, with about 7.5 million people, according to the Capgemini World Wealth Report. This figure is up 13.5% from the year before. Moreover, American buyers have been some of the most prolific in the London prime residential market over the last three years.

Capital would also likely follow from other dollar denominated investors who are well versed in prime acquisitions, such as those that are Hong Kong and Middle East based – the latter also benefiting from rising oil prices. Certain often cited factors such as the lack of regular wealth taxation or a mansion tax in the UK, along with a quality education offering, time zone and infrastructure continue to help make it an attractive prospect to HNWIs.

Ever easing worldwide travel restrictions can only assist prospective international buyers too. Heathrow Airport welcomed almost three times as many passengers in August than it did in the same month last year.

One potential obstacle to an impending spending spree is inflation, which has seen central banks globally respond by raising interest rates on a scale not seen since the early 1990s. However, the cost of borrowing is less of a consideration for many HNWIs who hardly need any leverage, with considerable capital at their disposal.

Diverse client requirements

Clients acquiring property in this sector often require Hollis’ technical due diligence expertise and value add services including M&E and project management – typically on properties over 10,000 sq ft where there is greater potential for refurbishment and maintenance to the highest standards.

For both domestic and international investors, renovation can be another means of investment. Properties in need of renovation often command a lower price tag than similar, refurbished properties in that same area. Consequently, the investor gets more for their initial outlay and added value through subsequent refurbishment, which improves the potential to achieve long term capital growth whilst minimising risk.

Our develop and fund teams are also responsible for delivering some of the capital’s most recent prominent schemes. One example is Triptych Bankside – providing 169 luxury apartments across two blocks as part of a mixed-use scheme. Prices achieved earlier this year for two penthouses at the Squire & Partners designed development were in excess of £3,500 per sq ft, setting a new benchmark for the area.

Whether the requirement is a topographical site survey for developing luxury apartments or surveys when buying and selling country manors or mansions, our surveyors and engineers have the flexibility the sector demands.