British buyers are increasingly being priced out of the UK property market by foreign investors, particularly the Chinese. The latest example, as reported in the Daily Mail, is the seven acre RAM Brewery development in Central London, which will be marketed exclusively to foreign buyers.
The increase in foreign interest in UK property is leading to a boom in property prices of 30 percent in some parts of London. The Bank of China is so keen on encouraging this sort of foreign investment that it now offers mortgages in Pounds Sterling.
Some of the Chinese investors are said to use the properties as second homes, but most are either the parents of university students or are buy-to-let landlords. As a result, they tend to favour city centre locations where young professionals and students rent.
In Birmingham, 30 percent of new property at The Cube has been snapped up by foreign buyers, leaving Brits to rent them back at a premium. The problem is further exacerbated because mortgage approvals in Britain fell through the floor after the 2008 financial crisis.
Michael Sacks of property development firm Sequre told the Mail: “New-build apartment blocks in Britain’s city centre are being bought en masse and then re-sold overseas, mostly to the Chinese, for significantly more than what they are actually worth.
“This is reminiscent of 2007, just before the property crash, when people were buying property without doing their due diligence and simply believing the sales hype that the market is booming.”
Angela Lin of JA One, a firm helping Chinese investors to find property in London: “People in China want to invest in the UK because it has steady growth.”
The actions of Chinese investors are in sharp contrast to the US backed development at Embassy Gardens Vauxhall, London. This whole new district will have a new underground (Tube) station built on former industrial land. The project is to create a whole new community of owner-occupiers in properties surrounding the new American Embassy to London.
The US State Department is expecting to make millions from selling their Grosvenor Square Embassy and building a new state of the art facility in Vauxhall. This is part of a wider policy dreamt up by the Bush administration to save money, improve security and update facilities.
London has long been a destination for super-rich foreigners, especially Russians and Arabs. But the impact of this immigration was previously confined to super-rich areas such as Knightsbridge. The new trend is to snap up mid-range properties that average Britons would previously have bought.