UK property investors are starting to look for opportunities outside London as foreign money floods into bricks and mortar in the capital, leading property agent Knight Frank has said.
The company said domestic demand was being spurred by improving conditions in the economy. Businesses that had been putting off office moves to save money were also coming under pressure to relocate to grow, Knight Frank said, as it announce- its annual financial results.
Profit before tax were up 7% to £102.7 million, with turnover increasing 5% to £350 million, in the year to the end of March. Earnings were buoyed by prime London real estate transactions. Official figures recently showed property prices in the capital were rising at nearly 10% a year.
Alistair Elliott, Knight Frank’s senior partner and group chairman, said: “Foreign money dominates investment in London property, although UK funds are reviving their interest in the regions.”
The remarks suggest the investment-fuelled boom in prices in the capital may be about to spread to other parts of the country.
Transactions in London included the sale of 20 Grosvenor Square, snapped up for £258 million in an Abu Dhabi-backed purchase, and that of Deutsche Bank’s headquarters at Winchester House, bought by the Chinese Investment Corporation for £250 million. Knight Frank, which operates in 48 countries, this year chose not to disclose the level of the bonus pot shared by its 63 partners though a spokeswoman said it was up on last year’s £65.2 million.
Mr Elliott said the year had seen a strong recovery in appetite for commercial and residential property, with its own survey revealing one in four “high net worth individuals” in the world wanted to increase their exposure to the sector in 2013. “In the UK, the prime London market continues to show strong activity and a steady rise in values,” he said.
“While international demand has remained strong, the resurgence of domestic demand, fuelled by improving conditions in the UK economy, has added impetus to both activity and price growth. The private rented sector continues to outperform and we expect this to continue over the next few years.”