Foreign Investors Propel Prime London Property Market in 2023

In a noteworthy trend, Strutt & Parker's London New Homes division reveals that half of the prime new builds in 2023 were secured by foreign investors, with a significant portion being dollar-based. This includes a substantial 30% from the United States, and the remainder originating from the Middle East.

Attributing the success of these new build projects to not only favourable currency rates but also the delivery of high-quality products, the agency emphasizes the alignment with traditional U.S. models. These models prioritize service offerings and amenity provisions, enhancing the appeal to an international clientele.

Victoria Allner, Director in the Private Client & International Department at Strutt & Parker/BNP Paribas Real Estate, notes, "Prime Central London continues to be an attractive marketplace for international buyers." The stability of premium values, coupled with the advantageous exchange rates, has created a conducive environment for buyers with dollar-based currencies, including those from the U.S., the Middle East, and Asia.

The trend commenced in September 2022 when the pound experienced record lows, coinciding with anticipated increases in Prime Central London (PCL) values over the next five years. This combination triggered heightened international investment in London's prime real estate, with the past year dominated by cash buyers or those with access to attractive lending options.

Cash buyers, leveraging favourable currency dynamics, enjoyed a 'double discount,' taking advantage of reduced competition in the market. Despite relatively low transaction levels, the values in PCL remained robust, with many buyers adopting a 'buy now and leverage later' strategy to maximize their discount window.

Strutt & Parker forecasts substantial Prime Central London house price growth of up to 10% over the next five years. Given that current values are still beneath the 2014 peak, the present market represents an opportune moment for savvy investors looking to capitalize on London's prime real estate sector.