Hongkongers are already the largest foreign group of home-owners in London and the recent drop in sterling's value against the dollar foreshadows a "substantial" rise in purchases from the former British colony, according to global real estate agents Savills and Knight Frank.And Barratt Developments, one of the UK's largest home builders, announced this week that it had appointed JLL, another international real estate agent, to be its sales and marketing agency in Hong Kong because of increasing demand.

Why are Hongkongers seeking out UK property?

Since Beijing imposed strict new security laws two years ago, there has been increased demand for overseas homes from Hongkongers, not just in Britain but, to a lesser extent, in Canada and Australia.In response to the security crackdown, the UK government announced a fast-track route to settle in Britain for holders of BN(O) passports in Hong Kong. Most recent Home Office figures shows there so far been more than 104,000 applications under the scheme.The search for overseas homes has been further encouraged by the widespread Covid-19 outbreak in Hong Kong and the strict lockdown measures that ensued.

Drop in value of the pound drives UK home purchases from Hong Kong

And now the pound has fallen to a two-year low against the dollar amid the stalling global economy. Nina Coulter, UK board director and director of residential development sales at Savills, told the South China Morning Post, “This significant drop in the value of the pound makes homes in the UK more attractive to buyers from Hong Kong."Whenever there is a 5% or more downward shift in the value of the pound against the dollar, we tend to see a 10% or more uplift in inquiries from Hong Kong buyers for homes in London, and the level of deals rises significantly.”Felix Cheung, head of sales at JLL’s international residential in Hong Kong, added that although higher interest rates in the UK might deter some, for many Hongkongers this was being offset by sterling's fall.“The impact of the decline in pound sterling value outweighs the increase of interest rates in the UK,” he said.

Hong Kong buyers pay close attention to movements in global financial markets

Tom Bill, head of UK residential research at Knight Frank, told the newspaper that UK monetary officials were walking a fine line as they tried to strike a balance between rising consumer prices and economic pressures. As a result, he felt the Bank of England might not be able to continue hiking interest rates in the coming months.“Hong Kong buyers are well-informed and tend to pay close attention to movements in global financial markets,” he said. “The currency discount on offer in the UK since the Brexit vote has therefore been an important driver of demand, and any current or future weakness in sterling will have the same effect.”

London is especially appealing to home buyers from Hong Kong

Meanwhile, Steve Mariner, sales director at Barratt Homes, told Business Insider, “We are seeing an influx of Hong Kong buyers putting down roots in the UK, particularly the capital and the surrounding Home Counties, and we know that JLL will be well placed to advise clients on the best options available.”Mandy Wong, head of international residential at JLL Hong Kong, said Hong Kong residents were “rekindling their passion for UK real estate investments” and that the agency was seeing many buyers looking to invest in London, in particular, to benefit from the city’s strong capital growth potential.“Barratt Developments has an unmatched reputation for building exceptional homes in the UK capital and beyond," she said.“With a range of townhouse and apartment styles available across its portfolio at accessible prices, we expect demand to be high and look forward to providing such a wide variety of options to our extensive client network in Hong Kong.”

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Read more news and views from David Sapsted in the Spring 2022 issue of Think Global People.

Join us at the Future of Work Festival on 9 June to explore these topics further and be part of a unique experience driving innovation and collaboration for growth. Book tickets here.

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