Hong Kong residents buy US$1.3 billion worth of homes in London after UK opened path to citizenship in July

SINGAPORE (EDGEPROP) - Nine months since the UK offered millions of Hongkongers a path to citizenship, the residents of its former colony have bought £959 million (US$1.3 billion) worth of homes in London, according to a leading property agency.

Between July 2020 and March 2021, Hongkongers bought 1,932 units or 4 per cent of London homes sold during the period, according to Marc von Grundherr, director at Benham and Reeves, one of the largest independent agents in the British capital. With house prices averaging £496,269, this works out to about £959 million, he estimated.

In the same period a year earlier, Hong Kong buyers spent £377.4 million, figures from Benham and Reeves showed. They accounted for 1 per cent of London homes sold.

Other analysts declined to give estimates, citing lack of official data. However, buyers from Hong Kong were active in London's prime property market, accounting for 8.5 per cent of purchases by foreigners in prime central London last year, the second-largest group along with mainland Chinese and Americans, according to property consultancy Knight Frank. The French were the top buyers, contributing 14.6 per cent to overall purchases.

"All things considered, the London market continues to present a great investment opportunity for foreign buyers," von Grundherr said.

The UK government has made it easier for 3 million Hongkongers who qualify for a British National (Overseas) passport and their dependents to relocate to Britain and stay and work or study for extendable periods of 12 months, creating a path to citizenship. The move came immediately after China officially imposed a sweeping national security law on Hong Kong on June 30.

An estimated 123,000 to 153,700 BN (O) passport holders in Hong Kong and their dependents are likely to come to the UK in the first year of the application and between 258,000 and 322,400 over five years are likely to purchase a home in the UK, according to the British government.

Home builder Barratt London, part of the Barratt Developments group, said that sales of its properties in London to investors from Hong Kong rose to 7 per cent last year, from 5.2 per cent in 2019.

"We have seen more enquiries from Hong Kong since the announcement of the BN (O) visas," said Stuart Leslie, international sales and marketing director at Barratt London.

The company said that its upcoming Western Circus project in Acton in west London has received strong interest from Hong Kong investors.

"With the most recent support from the government with stamp duty holidays and government-backed mortgages, we are seeing strong inquiry levels and keen interest both from domestic and overseas buyers," Leslie said.

The UK government has extended the stamp duty holiday to June 30 from the original March 31 deadline.

Meanwhile, analysts said that while a 2 per cent additional tax foreign homebuyers have to pay for acquiring property in England and Northern Ireland is likely to dent sales in London, overall demand in the UK is likely to remain strong.

The 2 per cent surcharge came into effect on April 1 and it is the first time the government has differentiated between local and overseas investors.

"We have seen no reluctance from Hong Kong buyers [despite the 2 per cent surcharge]," said Neil Jensen, mortgages specialist partner at financial planning consultancy St James's Place Wealth Management Asia.

However, only when the stamp duty holiday is fully wound up in October is the long-term impact of the surcharge likely to be felt, he added.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.