Hong Kong’s uncertain political future has led to a wave of departures over the past 18 months, with cities from Los Angeles to Vancouver seeing an increase in demand for residential property from residents of the city. But as the pace of Hong Kong emigration accelerates, London is emerging as a clear favorite destination, especially among high-net-worth individuals.
“The view is that while many global destinations provide strong appeal, the U.K. property market provides a safe haven with a track record of stability and growth,” said Arthur Sarkisian, a managing director at the investment immigration firm Astons.
Why the Migration Wave?
Hong Kong began to experience unrest in the spring of 2019 when large-scale protests broke out against plans to allow extradition to mainland China. Despite the extradition bill eventually being withdrawn, pro-democracy protests carried on throughout much of the following year, until Beijing imposed a new national security law in June 2020.
The law, under which at least 100 people have already been arrested, makes it easier to punish demonstrators and reduces Hong Kong’s autonomy. This month, 47 activists were charged with subversion under the legislation, after a mass arrest in early January.
In response, the U.K. government called the law “a clear and serious breach” of the Sino-British Joint Declaration—under which China is meant to respect Hong Kong’s legal independence until 2047—and announced a new visa system allowing millions of Hong Kong people to live and work more easily in the U.K.
The program, which took effect on Jan. 31, and applies to “BN(O)”—or British National (Overseas)—citizens as well as their immediate family members, provides a direct route to U.K. citizenship. The British government estimates that 5.4 million Hong Kong residents—or about 72% of the territory’s population—are eligible, and roughly 300,000 people are expected to pursue the scheme in the next five years.
What Does it Mean for London Property?
There has been a surge in interest in London real estate from Hong Kong over the past year.
According to Astons, Hong Kong residents represented the second-largest foreign buyer group in prime central London in the first three quarters of 2020. They accounted for 9.2% of foreign property purchases and spent an estimated £305.5 million across 243 transactions—or roughly £1.19 million (US$1.67 million) per property.
In the fourth quarter of 2020, estate agent Benham and Reeves recorded a 63% year-over-year increase in foreign buyer demand from Hong Kong, and interest has only accelerated since. In January, it saw a 73% year-on-year rise in interest, and in February demand jumped 200%.
According to Benham and Reeves, the vast majority of Hong Kong people interested in London are looking to buy residential property in anticipation of a possible permanent relocation. Some, who want to relocate their businesses as well as their families, have also expressed interest in commercial property. (The spike in demand is also likely linked to the upcoming 2% increase in stamp duty tax for foreign buyers, which comes into effect in April.)
Article Source: Mansion Global