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September 5, 2016

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Home » Business » Real Estate Special

Despite Brexit, is UK property a safe bet?

DESPITE this summer’s UK plebiscite to exit the European Union, London remains a popular destination for real estate investors from around the world.

Its attributes are a competitive economy, good education system, sophisticated legal system, high quality properties and robust rental returns.

To be sure, Brexit has stirred some uncertainties in the UK property market. One immediate fallout was the decline in the pound, which reduced the cost for Chinese mainland investors and led to an increase in real estate transactions, according to Savills, a leading London-based real estate consulting firm.

Michelle Zhou, a 10-year industry veteran who heads International Residential Sales at Savills China, discusses UK prospects.

Q: Would you give us a brief introduction to Savills?

A: Established in 1855, Savills has been one of the world’s most renowned international property consulting firms, with over 30,000 employees in more than 700 offices across North America, Europe, the Asia Pacific, Africa and the Middle East. In UK, we were voted the best real estate consulting firm for eight years running. We have 138 offices across the country. Residential property has remained our core business. Research shows that nearly 95 percent of the UK population uses the Internet as their preferred method of searching for properties, and is the most visited national realty agency website.

Q: How large is your operation in Lon-don? Is there any business volatility after Brexit?

A: Currently in London alone, Savills operates 37 offices and serves as the agent for about 100 projects, covering almost all zones and at various prices. Actually, we are receiving more calls of inquiry after the Brexit vote from investors looking for property opportunities in London and some other British cities.

Q: Globally, high net-worth individuals are diversifying their assets through real estate investment in other countries. What kind of services does Savills provide for the clients who are looking at markets like Lon-don but perhaps aren’t sophisticated in going about it?

A: Savills has the expertise to recognize high-quality assets as well as foresee potential bubbles. International buyers, especially those from the Chinese mainland, might have some difficulty keeping abreast of useful information and transaction procedures. Therefore, we have established a service line across UK and China called the International Residential Investment team. It has teams in both the UK and China. The teams’ responsibility is to help investors optimize their portfolios in the global market and purchase good residential properties.

In China, our International Residential Sales team helps buyers search for quality projects within their budget, helps them access experienced solicitors, helps them with mortgage and cash flow plans, and helps assist them with transaction procedures. The Chinese Business Team, based in London, provides Chinese-language services to Chinese buyers visiting London. That means buyers can access basic information from our team in China about location, price and floor plans, as well as transaction procedures and tax and mortgage issues. And if the buyer wants to visit a prospective property, our local team in London will arrange that and also take good care of the property once purchased.

Q: There are many realty consulting firms selling international residential properties in China. In your opinion, what makes Savills different from its counterparts?

A: There are quite a few ways in which we are different. Firstly, Savills is the No. 1 residential agency in UK, with more than 160 years’ expertise in the residential market. As a truly inter-national enterprise, we’ve watched the long history of residential property, not only in the UK but also in many other countries around the world. We have a deep understanding of market rules and the economic cycle of real estate.

Secondly, we have offices in China, the UK, the US, the Middle East and many other places. Together with our partners of solicitors and mortgage services around the world, we are able to offer a complete information and service chain, ensuring benefits to the client and improving the efficiency of transactions.

Last but not the least, we are a team with a high sense of responsibility. Buyers usually have many concerns before making any final decision. They want to know about market trends, the direction of prices, and when is the best time to step in and buy. They also worry about the safety of trans-actions, such as who will safeguard their money for them before title is transferred. Our team is always patient in purchase planning and financial analysis.

Q: What would you currently recommend Chinese investors to buy in the UK, both for self-occupation and buy-to-let?

A: That really depends on the budget and purpose of the purchase. For self-occupiers, projects in mature areas are preferable because of their amenities and good connections. Brandon House could be one ideal choice for them. It sits near the tube station of Borough, within walking distance of the Shard, London Bridge, Shakespeare’s Globe and the Tower Bridge.

Gasholder London is also a highly recommended project. It’s located around the Kings Cross Station, the most important transportation junction in London, where six lines join up. Price there start at about 800,000 pounds (US$1.05 million). Apart from these two, we also have many popular projects in London, like Lillie Square in Earls Court, Southbank Place on the south bank of the Thames River, Chelsea Barracks near Chelsea Bridge and Television Centre at White City in West London, which was once the old headquarters of the BBC.

For those seeking a high return on investment, rapidly developing areas would be more recommended. We have Royal Albert Wharf in the East London, with prices starting at about 350,000 pounds. Located near London City Airport, this area is experiencing exciting economic growth, with a big Asian Business Port under construction. This will be a financial center of the future, creating continuous growth, both in population and economic activity.

Prime Place is also a wonderful choice with affordable prices in Zone 2 of North London. It takes only 20 minutes to get to Bond Street by subway. Prices start at about 500,000 pounds.

Besides London, Manchester is also a good option for international property investors. Thanks to the North Powerhouse Plan, Manchester is seeing a rapid increase in population and fast economic development. In recent years, the residential market there has been witnessing high rental returns for homeowners, at around 7.68 percent. Capital value growth in the past 18 months has hit 21 percent.

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