Hong Kong people become experts in UK property market

November 26, 2020 09:29
Photo: Reuters

Deptford, Battersea, Mill Hill and Salford – a year ago few people in Hong Kong had heard these names. But not now – these districts of London and Manchester are on the map of people looking to buy properties in the United Kingdom.

Since the start of the protests and especially Britain’s offer to accept holders of BNO passports in July, the city’s residents have been bombarded with advertisements for these properties and seminars explaining how to buy them. Agents have held sales exhibitions in Hong Kong hotels, especially helpful when residents cannot travel to the U.K. to see the properties in person.

In the first nine months of this year, Hongkongers spent 305.6 million pounds (HK$3.1 billion) on prime properties in London, ranking second to the French and ahead of mainland Chinese, according to research by Astons, a residency and citizenship consultant.

Arthur Sarkisian, managing director of Astons, said that the ability of BNO passport holders in Hong Kong to apply for British citizenship had started to affect the London market, as people searched for home in anticipation of a move.

Among the biggest projects is Convoys Wharf in Deptford in southeast London; it covers an area of 16.6 hectares and aims to attract investment of HK$18 billion. Since Cheung Kong is building it, its nicknames are “Li Family City” (李家城) or “Hong Kong City” (香港城).

It will have three 40-storey towers with 3,500 units, as well as restaurants and shopping malls. A 1,300-square-foot home with four rooms in nearby Evelyn Street costs one million pounds and a home with 700-1,000 square feet costs 600,000-700,000 pounds. The nearest train station is 10 minutes walk away. It is not connected to London’s underground system.

A more expensive option is an apartment next to Battersea Power Station, on the River Thames, in the central Number One Zone. Work is due to be completed in 2021, with an investment of nine billion pounds, on 3,400 units. Prices of units in the first phase begin at 795,000 pounds.

For the less wealthy, there are many options outside London. A one- to two-bedroom apartment and townhouse in the Jewellery Quarter in the centre of Birmingham, Britain’s second city, costs 185,000 pounds and above. The developers promise a rental yield of 5.4 per cent.

Prices of a two-room unit in Northill Apartments in Salford, Manchester begin at 280,000 pounds, complete with fitness centre.

Richard Leung, a property consultant, said that these properties were aimed at different audiences. “One are those who have definitely decided to emigrate and need a place to live. A second are those who are considering whether to go and want a property first. The UK economy is in very bad shape and good jobs hard to find. HK migrants may have to live off rental income for the first few years,” he said.

In the third quarter of this year, U.K. GDP fell by 9.6 per cent over the same period in 2019, compared to a fall of 4.3 per cent in the Eurozone. The IMF has forecast that the fall in the UK GDP for the whole of 2020 will be the deepest of any G7 country.
In its latest forecast, the Bank of England said that it will take until 2022 for the economy to recover to the pre-COVID-19 level. Britain has not yet agreed a trade deal with the European Union, with the deadline at the end of 2020, nor is certain of a vaccine that is the only way to end the pandemic.

“All this makes it a difficult time to move,” said Leung. “The migrant must be ready to live off savings or income from investments in Hong Kong or the U.K. Unless he or she is highly qualified, he may not find a job sufficient to cover living and education costs.”

Last month the British Home Office gave estimates of the number of BNO passport holders from Hong Kong expected to come. The “high’” range was 500,000, including dependents, in the first year, with more than one million over five years. Total immigration to Britain in the year that ended in March 2020 was 715,000. A more likely “central” estimate is 153,000, including dependents, in the first year and between 258,000 and 322,400 over five years.

It estimated the stimulus to the economy from the Hong Kong migrants of 2.4 billion to 2.9 billion pounds, mostly in the form of additional taxes.

Things may not be so simple. An exodus of this level of talent and capital may persuade Beijing to implement a threat it made.

It said in October that, by giving the right of abode to BNO holders in Hong Kong, Britain had broken a promise made before 1997. “Because of this, China will consider not recognizing BNO passports as valid travel documents,” said Zhao Lijian, spokesman of the Foreign Ministry.

That would mean preventing Hong Kong people with such passports from boarding international flights, a very grave step that would have profound global repercussions.

This threat has made the decision of whether or not to move to Britain, already difficult enough, even more complicated.

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A Hong Kong-based writer, teacher and speaker.