In Spring 2011, we analysed who was buying in the prime secondhand markets, where they came from and what they were spending. We estimated that £3.7 billion of new equity had flowed into the prime London residential market during 2010 and that a significant proportion of this had landed in the new homes market.
We have now updated and revised our analysis which suggests that the rate that overseas equity flowed into newly built London property was larger than originally estimated and that it has accelerated. Last year (2011), £1.4 billion of net new equity will have flowed into the newly built prime market alone.
By putting cash in the pockets of London’s developers, often prior to the physical completion of a scheme, this overseas equity is an important source of funding. This document seeks to understand where it is coming from and why; and to examine how this has changed and is likely to change in future.
Buyer types in the new build market are heavily influenced by developer’s marketing strategies and are reflective of what has been sold in different parts of the world.
The enormous success experienced by UK developers in recent years in selling units in Asia Pacific is clearly illustrated in Graph 1. Chinese and Pacific Asian buyers now constitute 33% of all new build buyers, up from just 4% in 2009.
Overall, overseas buyers have become much more important than UK buyers in prime London over this time. In 2011, UK buyers were a minority in the market – constituting just over a third of buyers.
In 2011, social unrest in the world coupled with political uncertainty, has meant that London living has become increasingly attractive, demonstrated by a rise in the proportion of Middle East and North African buyers in this time.
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