13 May 2015, Financial Times
Central London’s residential market has long been the focus of international interest. Headlines have highlighted the significant numbers of Russian, Middle Eastern and Chinese buyers, but a new influx of buyers and investors from Africa is now demanding attention.
Harrods Estates’ prime central London office in Mayfair has reported a 400 per cent increase in sales to African buyers in the year to March 2015, compared with the previous 12 months.
“The majority are looking to spend between £2.5m and £6.5m on a two-or –three bedroom apartment, where they can stay when visiting London on business or for pleasure.” says Shirley Humphrey, director at the agency.
“Absolutely numbers are still relatively small but the growth has been quite spectacular and is continuing, exceeding the growth from any other region in the world. African buyers are mostly working in the oil sector. We recently sold two apartments to two men visiting oil firms in Aberdeen. They enjoyed their stopover in London and decided to buy an apartment each,” she says.
The growth in interest from African buyers is also being seen in the higher reaches of London’s residential market. Diles Hannah, senior vice president in London for Christie’s Real Estate, says he has seen a 12 per cent rise in Africans buying in the £10m-plus category over the past year, mostly in Mayfair, Lancaster Gate, Knightsbridge and the City. The buyers are mainly from Ghana, Nigeria and South Africa and are high net worth business owners in oil, finance, minerals and textiles,” he says.
Beauchamp Estates says that, in the three years to late 2014, African buyers spent more than £600m on property it sold in central London. The majority of these buyers spend £15m to £25m each on a home and are from Nigeria, Ghana, Congo, Gabon, Cameroon and Senegal.
“Nigerians in particular, have been longstanding purchasers, in the 1980s and 1990s, typically in North London- Hampstead, St John’s Wood and Primrose Hill. Now enhanced wealth has enabled them to move into Mayfair, Belgravia and Knightsbridge, joined by purchasers from other West African states,” says Gary Hersham. He adds that Africans are also beginning to have an impact on the prime lettings sector.
“They tend to rent a luxury apartment in Mayfair, Belgravia or Knightsbridge for £2,500 to £5,000 per week or on a short let for £10,000 to £15,000 per week [and] stay in London for anything from six weeks up to three months, “says Hersham of his clients.
The reasons for African interest include the stability of the UK’s economy and political institutions. A 2013 report from property consultancy Savills contrasted London’s residential sector with African markets, which “can be volatile with political unrest of a sometimes extreme nature” and can also suffer from “corruption, lack of regulation and a lack of transparency.
In addition, some African nations have longstanding Commonwealth connections with the UK, while a large number of opinion- formers have personal links. “Many wealthy Nigerians were UK-educated and send children to school here, for example,” says Camilla Dell, of Black Brick, a London buying agency, which- since 2007- has seen 44 per cent of its clients come from Africa.
Of those from Nigeria- by far the largest group- 58 per cent have bought homes to live in and 42 per cent bought property as investments. Dell’s clients have shown a preference for recently modernised properties or new builds similar in design to those in Africa’s more exclusive compound developments. They also demand privacy, with facilities such as a 24hour concierge and extensive security.
Private estates, with large, modern houses and easy access to both central London and Heathrow and Gatwick airports have proven especially popular. “St George’s Hill in Surrey is a hotspot for this type of purchase,” says Alex Newall, of Hanover Private Office, an estate agent catering for buyers at the high-end of the market.
However, there are signs that this enthusiasm for British property has taken a knock in recent months as certain domestic issues have had the effect of reducing some Africans’ purchasing power. Nigeria’s economy, in particular has been hit by a fall in international oil prices from $100 barrel to about $60. In addition, some African countries, notably Ghana and Nigeria, have seen their currency weaken against sterling, making London purchases dearer.
Roarie Scarisbrick, of Property Vision, a buying agency that makes regular trips to Africa to meet clients interested in London’s real estate, admits “it’s gone pretty quiet” recently because of these oil and currency issues. “But the Africans will be back,” he says.
Harrods’ Shirley Humphrey is similarly optimistic. “There’s a lull in the market now, because, like every other nationality, African buyers are waiting to see what happens,” she says. “They are a growing force and when the market returns, so will they.”