ext spring Peter and Melanie Tunstall will finally be on their way to London to start a new life – and find a new home.
The couple, both originally from Connecticut, are planning to swap the frenetic, high rise, and increasingly politically-unstable Hong Kong for a leafy London urban village. And, if property pundits are correct, they will not be alone.
The relaxation of UK travel restrictions has opened the floodgates for overseas buyers to return to the British capital after a 16-month absence.
Experts believe that when they do the fading fortunes of Prime Central London will be decisively reversed.
Buying agent Camilla Dell, managing partner at Black Brick, has been advising high end clients on their property purchases since 2007.
During the height of the pandemic, she said, overseas buyers vanished. In September her phone started ringing again and her client roster now includes buyers from across North America, Africa and the Middle East keen to drop £2m to £5m on a PCL property.
“Overseas buyers are certainly back; you only have to walk through Mayfair or Knightsbridge or try and book a table at Scott’s to see how busy London is again,” agreed buying agent Jo Eccles, founder of Eccord, who is currently working with clients from the US, Israel, Germany, and Azerbaijan.
Peter and Melanie visited London in January 2020 to reconnoitre potential locations. After rejecting everywhere from Chelsea to Shoreditch (“I don’t have facial hair or a man bun, so I feared I would be discriminated against,” explains Peter), they settled on Marylebone, for its village feel and central location. Their budget, for a flat with outside space, is £5m to £6m.
“I have been in Hong Kong for 21 years, and I met my wife here,” explained Peter, 57, who works for a logistics company. “But we were never going to be here forever. Hong Kong is more a place to work and get out than a place to stay.”
The couple had hoped to move last year but the pandemic prevented them. “The problem is not getting into the UK, it is getting back into Hong Kong,” said Peter. “There is a three week quarantine period, in a government-specified hotel, and they are increasingly hard to book. We have realised that we are not going to be able to look at property until we are living in London full time.”
Fortunately, the couple have friends with a pied-a-terre in South Kensington they can borrow, and they plan to move next spring. Melanie, 40, will continue to run her fashion company remotely while Peter is planning to set up a company himself.
The absence of buyers like Peter and Melanie have, collectively, had a massive impact on the property market PCL.
Pre-pandemic overseas buyers were responsible for around half of all property sales in neighbourhoods like Knightsbridge and Mayfair, according to estate agent Hamptons. This year that figure had dropped to just over a quarter.
Prices have not plunged – according to most house price indexes they have simply remained reasonably flat – although the number of sales has collapsed.
“That is because of the nature of property ownership in PCL,” said buying agent Andrew Weir, CEO of London Central Portfolio. “At times of soft prices people just don’t sell, because they don’t need to.”
Lucian Cook, head of residential research at Savills, believes that as overseas buyers return prices will start to rise.
“As international travel is progressively reinstated, we expect to see more pronounced price growth in this market, which has been a long time coming,” he said. “While we expect prices to end the year around two per cent higher in 2021, we expect annual price growth to rise to eight per cent next year.”
One measure of the presence of high rolling international visitors is activity at Farnborough Airport, one of the most luxurious private airports within easy reach of London, where the number of arrivals and departures last month was up 62 per cent compared to September 2020.
Emirates has reopened its lounge at Heathrow as travellers from the Middle East return, and London’s hotels are also busier than they have been since the onset of the pandemic.
And from private jets to five star hotel high rolling international buyers have a very different experience of house hunting to those lower down the property ladder.
Marc von Grundherr, a director of Benham & Reeves estate agents, said buyers coming in from Hong Kong favour the Mandarin Oriental in Knightsbridge as a crash pad during buying trips, while Asian buyers like the JW Marriott Grosvenor House Hotel on Park Lane. Middle Eastern clients tend to favour old school luxury hotels and can be found at the Dorchester, Claridge’s, or the Connaught.
Buyers who know London well are happy to whip out their Oyster card and go to viewings by train, while newbies might hire a driver.
And agents like von Grundherr might volunteer to chauffeur them around town themselves. “Some agents have a Rolls Royce to drive clients around in, but I think that gives totally the wrong impression,” he said. “We have a nine seater Mercedes.”
While looking around ultra-luxurious houses buyers must place shower-cap style plastic covers over their designer shoes to protect floors, and if children are to be present von Grundherr brings a colleague to help supervise the little darlings to prevent breakages of priceless pieces.
Non-Disclosure Agreements are a rarity, required only if a property has a very high profile owner, but taking pictures on your phone during a viewing is a massive no.
Buyers at this level also have a strict list of buying requirements, said Simon Barry, head of new developments at Harrods Estates.
“High net-worth individuals are always on the lookout for any property with a view of one of London’s parks and Hyde Park especially and will usually stick to the golden postcodes around Kensington, Knightsbridge or Mayfair – though many are happy to look at Bayswater and Marylebone where they will get more for the same budget,” he said.
Von Grundherr adds leafy London villages like St John’s Wood, Richmond, and Wimbledon to the list.
“Would I show them anything in East London? Absolutely not,” he said. “They would think I had gone mad. “They don’t know the location and there is an awful lot of keeping up with the Joneses, so they look at where other people have gone before them.”
Many international buyers want a London home for occasional visits.
Karen Goodin, a partner at Heaton & Partners, is finding increasing numbers of her buyers want a London crash in favour of staying in hotels when in town, perhaps because a private home provides a more Covid-secure environment.
“I have a Canadian with a £1.5m budget, and an American with a £4.5m budget, both looking to buy a Chelsea pied-a-terre as an alternative to staying in a hotel and with the added prospect of future capital growth,” she said.
Others are looking for student digs for their fortunate offspring. “One US client searching for a property in Mayfair is a couple looking for an apartment for their daughters, who will be attending boarding school in the UK,” said Eccles. “They were only willing to consider two of the most sought after streets in Mayfair.”
With these kinds of budgets and stories overseas buyers are, certainly from the standpoint of a Londoner struggling to get onto the ladder, easy to hate.
But in many ways what happens in PCL, boom or bust, doesn’t really matter in the real world. If average prices in Kensington & Chelsea, currently just over £1.3m according to the Land Registry, were to rise or fall ten per cent overnight they’d still be too expensive for all but the one per cent to consider.
“A very exotic, rarefied £6m flat in Knightsbridge being sold has a very negligible impact on the wider market in the greater scheme of things,” said Weir. “What you have got in PCL is a certain group of very wealthy people from a vast array of countries buying and selling properties to each other and it has been that way for a very long time.”