Majority of new London homes sold to foreigners
Close to 75 percent of all new residential purchases in central London last year were made by foreign buyers, with over 50 percent coming from Singapore, China, Malaysia and Hong Kong, according to property consultancy Knight Frank.
Most of these homes were sold at overseas exhibitions before they were even advertised to UK buyers, who made up just 27 percent of the area's new buyers.
The surge in overseas buying has highlighted the growing use of off-plan sales by developers, whereby they sell sites before the actual construction process to fund a new project. An established practice in Asia, off-plan sales rewards buyers with discounts on the completed property.
Meanwhile, local politicians have criticised the rising number of homes sold overseas. Simon Hughes, deputy leader of the Liberal Democrats, raised concerns that the trend could drive up prices for local buyers and distort the market.
However, developers noted that pre-building commitments by foreign buyers has helped many projects break ground.
"For a lot of developers, if you can't show that you can pre-sell enough to cover the construction costs, the banks simply won't finance you. It would be suicide to put £100 million (S$194 million) of your own money into the ground without forward sales," said Rob Perrins, Chief Executive of Berkeley Homes, the UK's largest home builder in terms of market value.
Nikki De Guzman, Junior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email nikki@allproperty.com.sg
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