Financial News

  • 9 February 2014, 19:08

More Foreigners 'Pumping London Bubble'

Upheaval in the largest emerging markets is driving a new wave of super-rich foreigners into London's overheated prime property market.

Data from high-end estate agent Knight Frank has shown a huge spike in online inquiries from countries including Argentina, Turkey and Ukraine.

"There is potentially a further wave of investment headed for the prime central London property market," Knight Frank residential research expert Tom Bill said.

Top London property prices have already risen sharply from previous waves of foreign investment from Russia, China and other emerging markets.

It has also been bolstered by investors seeking havens outside of the eurozone and because of turmoil in the Middle East.

Rising interest rates in South America have also caused huge spikes.

The company said the biggest increases in visits to its property website came from Brazil (up 115%), Argentina and Ukraine (both up 67%), as well as China (up 31%).

Sophie Dworetzsky a partner at law firm Withers, which handles high net worth property clients, said: "This doesn't surprise me at all.

"If you invest in high-end London property you probably feel you have a degree of certainty, it's like a safe currency."

The Nationwide recently said London prices were boosted by 14.9% in the last three months of 2013, compared to the previous year.

Sky News Economics Editor Ed Conway first revealed the Chancellor's decision to impose a capital gains tax on wealthy foreign investors from 2015, as a way to apply downward pressure on a potential bubble.

Millions of Londoners have seen property values rise above the national average, causing difficulty for those trying to enter the property market.

The price shock waves have also pushed up prices in other areas in the South East.

The Government's Help To Buy scheme has also been cited as a possible cause of overheating prices.

Knight Frank said actual sales from foreigners' property inquiries normally take place three to six months after online searches are completed.

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