Foreign Students Fuel London Housing Boom

Property prices in prime London locations are soaring as foreign investors buy homes for student offspring. Jennet Siebrits, head of residential research at CB Richard Ellis said, "In what is truely emerging as a tale of two cities, the prime Central London property continues to defy the downturn, thanks to strong interest from international investors.

Property prices in prime London locations are soaring as foreign investors buy homes for student offspring.

The weakness of sterling against the yen, dollar and dirham has helped parents to buy in Kensington and Westminster, where prices are rising by about 20 per cent a year, according to the property company CB Richard Ellis.

As English universities struggle with their budgets, many are actively recruiting foreign students, who pay higher fees, particularly from East Asia. And more wealthy foreign parents are trying to combine a property investment with an upmarket residence for their children.

Jennet Siebrits, head of residential research at CB Richard Ellis, said: “In what is truly emerging as a tale of two cities, the prime Central London property continues to defy the downturn, thanks to strong interest from international investors.

“The popularity of prime London property has been buoyed by the international appeal of its universities with many wealthy parents looking to combine an apartment for their children with a good long-term investment.”

While prices in Westminster are now broadly in line with their peak levels, if you buy a property now with Japanese yen, it would be 36 per cent cheaper than it was at the market peak, when sterling was much stronger.

Average prices have risen by 23 per cent to £876,721 in Kensington and Chelsea since April last year, and nearly 20 per cent to £625,392 in Westminster, buoyed by international investment. At the same time growth across the rest of London has been much slower, at about 14 per cent.

While Russian buyers have dominated the top end of the market in recent years, CB Richard Ellis believes that Chinese buyers are next in line as major players in the London property market.
China has just outstripped Japan as the world’s second-biggest economy, behind the US, and the population is increasingly affluent. There are now 64 billionaires in China, compared with 28 in 2009, according to Forbes.

Ms Siebrits added that the lack of properties coming to the market is encouraging potential buyers to cast a wider net than the traditional “golden postcodes” of Kensington and its ilk. Hampstead, St John’s Wood, Notting Hill and the South Bank are all coming under scrutiny as sellers delay putting their properties on the market.

More wealthy domestic buyers could return to the market next year as prospects in the City improve, according to CB Richard Ellis.