10 Jul, 2020

Visa shake-up provides UK property opportunity

Manchester forecast 2020

During uncertain times, people naturally seek more security. With the news that Beijing is pushing through a new national security law that will threaten the autonomy of Hong Kong, it is understandable that the city’s residents are beginning to look at options elsewhere.

In this situation, the UK has emerged as an extremely tempting option. The country’s Prime Minister, Boris Johnson, has raised the possibility of “one of the biggest changes to our visa system in British history” to allow Hongkongers eligible for British National (Overseas) passports to emigrate to the country if need be.

Under the proposed plan, up to three million Hongkongers who qualify for a British National (Overseas) passport and their dependents could relocate to the United Kingdom to work or study for an extendable period of up to a year – which could create a path to citizenship.

In particular, this makes it the perfect time to look at purchasing UK property, both for a potential new home and as a secure investment for the future. Indeed, the South China Morning Post has reports from Hong Kong real estate agents of increased interest in UK property since the latest crisis began.

Mei Han Wong, executive director and head of international sales at Knight Frank Hong Kong, said: “With what’s happening in Hong Kong at the moment, from an immigration angle, we are seeing a lot more inquiries in the UK in particular.”

She went on to emphasise that the number of enquiries in UK property naturally increases in times of turmoil – noting that the same happened during the uncertainty over the abandoned 2019 extradition bill. Knight Frank figures show that we should expect the number of Hongkongers enquiring about UK property to increase by at least during this time, meaning that those who act fastest will be able to secure the best deals.

This is especially true for those looking to invest in UK buy to let property and benefit from a favourable exchange rate “with the pound sterling weakening from 12.06 in 2015 to about 9.38 against the Hong Kong dollar in recent days.”

Andrew Hawkins, international sales and marketing director at Savills UK, agrees that this is an ideal time to invest, saying: “There has always been strong demand in the UK property market from buyers in Hong Kong. Hong Kong nationals are the most active in relation to UK property purchases and for these buyers it is not purely an investment destination, but also a lifestyle purchase to live either full or part-time.

He goes on to say that Hongkongers have traditionally been most interested in London due to its booming property market – but is this the case anymore?

The latest figures from property portal Rightmove show that rents in London are only increasing by 0.4% year-on-year which is only a quarter of the national average increase. Likewise, research from Hometrack shows that capital appreciation in London is only one third of that seen in regional cities such as Manchester and Birmingham.

In fact, those cities are performing so well that they are far and away the better choice for buy to let investment when compared to London.

The rate of house price growth in Manchester far above the national average, and the latest estimates from Savills show that we can expect a further increase of almost 25% by 2025. This will be driven by enormous population growth – particularly in the city centre where Manchester City Council projections show that 5,000 people are moving into the heart of the city each year.

The city centre has one of the UK’s fastest-growing economies and is particularly strong in the sectors most likely to attract young professional workers to the city. For example, Manchester has been named the tech capital of the UK following its tech sector seeing a 277% increase in investment over the course of 2019.

Birmingham is an equally impressive prospect for Hong Kong property investors. Much like Manchester, it is the site of huge commercial developments that are creating thousands of jobs, as demonstrated by the city centre’s office market which has grown by 50% in the last year alone.

Companies like Deutsche Bank, KPMG, PricewaterhouseCoopers and DLA Piper have all opened significant headquarter offices in Birmingham – and their young professional workforces are demanding the highest quality of luxury homes in the region. As demand increases, so will property prices, and Savills projects that the Birmingham area will see capital appreciation of more than 18% by 2025 – far more than the national average.

This is the perfect time to invest in UK buy to let property. Manchester and Birmingham are home to the most impressive housing markets in the UK, making them perfect for any Hong Kong property investors looking for a secure investment.

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