19 November 2014, opp connect
It’s not wealthy Russians of Middle Eastern buyers who have bought the most prime central London property over the last few years, but Africans, says the Black Brick agency
Wealthy African property buyers are the largest buyers of prime property in central London, according to new research.Independent property buying agency, Black Brick says Africans are involved in getting on for half of prime central London property sales since January 2007.
In total, Black Brick has represented 35 different nationalities, with Africans forming the highest percentage of buyers at 43.7%, followed by Middle Eastern buyers at 17.1% and Asian and UK buyers tied in third at 10%.
Camilla Dell, Founder and Managing Partner of Black Brick, tells OPP Connect, “Although the perception is that the majority of Prime Central London’s overseas buyers are Russian or Middle Eastern, Africans have always had a big affinity with the UK and London.
“Over the last eight years, we have successfully acquired £236 million of residential property for African buyers from Nigeria, Kenya, Zambia, South Africa and Uganda.” Nigerians have been particularly active in looking for secure developments, Ms Dell says. “Like a lot of our owner / occupier international clients, many wealthy Nigerians were educated in the UK and send their children to school here.
“Typically, Nigerians like gated, secure developments, as this is what they are used to back home, where most houses and apartments are located within secure compounds. Even though London is of course, much safer than Nigeria, they still prefer to be in secure developments, preferably with a 24hour concierge or porter.”
One of their favourite locations for new-build developments is Imperial Wharf, which known as ‘mini Lagos’ but many High Net Worth Nigerian clients prefer to explore new areas, but still retain privacy. “We have recently acquired high value properties in areas such as Belgravia and the SW3 part of Chelsea – 39% of our Nigerian clients have bought in either SW3, SW10 or SW1, closely followed by 35% buying in North West London postcodes such as NW8, NW6 and N2. In addition, 58% of our Nigerian clients have been purchasing homes in London with the remaining 42% buying for investment.”
There are signs that London is set to attract more investors from Angola. “In terms of future ‘ones to watch’ there is vast quantities of wealth being generated from Angola,” says Ms Dell. “Typically, Angolans have tended to buy in Portugal due to the fact the language is the same. However, we predict that it will only be a matter of time before Angolans start to diversity and look to London property. As markets mature and clients look for other ways to spread and diversify their wealth, London eventually ends up on their radar.”
The majority (68%) of Black Brick’s Asian clients are Malaysian, followed by 25% from Singapore and 6% from Hong Kong. Overall, half of Asian clients are investors and half buy homes, but Singaporean and Hong Kong clients still just to investment property.
Malaysians’ favourite postcodes are W8 and W14 (Kensington) and W2 (Bayswater), which attract two-thirds of buyers. Kensington, appeals because it is within walking distance of Kensington High Street and it is where Malaysian’s tend to have the highest budgets. W2 Bayswater has a high concentration of Malaysian restaurants and is near Paddington for the Heathrow Express.
Camilla Dell explains, “New developments such as The Lancaster’s opposite Hyde Park have been popular with Malaysian clients who like the security and facilities offered by these type of new luxury new build developments.
“Contrary to popular belief, Malaysians don’t just buy new build either, with the majority of our clients buying into red brick mansion blocks and period houses. “By contrast, all of our Singaporean and Hong Kong clients have been investors, buying in prime postcodes in SW3 Chelsea, SW7 South Kensington and W8 Kensington.”
Middle East buyers, whose numbers have been rising since 2007, are from Egypt, the United Arab Emirates, Saudi Arabia, Jordan, Kuwait and Lebanon and most are looking for safe investments. Most (38%) are from the UAE, with Saudi buyers at 19% and Egyptian buyers, who have the largest average budgets at £5.175million, making up 15%.
More than three-quarters (77%) are owner occupiers, and just 23% investors. The most popular postcodes for Middle Eastern buyers are SW1 and SW3, prime Knightsbridge and Chelsea addresses, followed by W2 Bayswater and Hyde Park and W1 Mayfair.
“Various events such as the “Arab Spring” and continuous political uncertainty and turmoil in this region of the world has led to many Middle Eastern buyers looking for a safe place to invest, and London is top of their agenda,” says Ms Dell.
“In the UAE, the buying reasons are different, with many of our clients having had their fingers burnt in the past with their own local property market booming and then busting. As such, they are looking to diversify and invest in more established and stable property markets such as London so it’s not surprising that the most popular postcodes are the renowned Chelsea and Knightsbridge addresses.
“We were one of the first buying agents to acquire an apartment in One Hyde Park back in 2007 when it was entirely off plan on behalf of an Egyptian client. It looked extremely expensive at the time, setting new records in terms of price per square foot, but actually, our client has made over £1 million in profit since acquiring the property as prices have risen significantly.
“The main driver behind the purchase was that our client wanted a safe and secure home in London. The fact that it has been a good investment has been an added bonus.”
Budgets for Black Brick investors (who make up 40% of all purchases) were on average, just over £2million in 2007, this fell to £1.31million in 2009, and is just over £1.4million in 2014. But average owner occupier budgets have fallen from £4.66million in 2013 to £2.92million in 2014.
“It’s not surprising that our prime central London property investment clients have chosen to stay under the £2million threshold, we have always advised them to diversify and buy several smaller units rather than invest a large sum into one property as it is too high risk and there are fewer tenants for large family homes compared to one and two bedroom flats.
“We are also seeing a trend for investors to stay below £2 million to stay out of the higher stamp duty bracket and possible mansion tax which may come in next year. However, over time, some of our investment clients have tended towards buying entire freehold residential blocks for between £5million and £20million, which can also make savvy purchases as this allows complete control over the way a building is run and managed as well as flexibility on future exit strategies – for example, sell some, retain some, rent some units.
* Meanwhile, South African investors are keen to buy German property, according to analysts and fund managers of listed property.
There is the fear that interest rates will rise markedly in South Africa next year, while Germany has record low interest rates with relatively high yields.
Kagiso Asset Management investment analyst Justin Floor says, “We believe there is a compelling case to be made for investing in German residential property, which looks set to benefit from extremely strong fundamentals,” the BDLive website reports.
“A combination of powerful forces is set to substantially increase demand for residential units in the future.” An increasingly ageing population and falling replacement ratios means that Germany’s population faces potential decline, but that is being offset by net immigration and associated urbanisation, resulting in rising demand for residential property, he says.