Hong Kong buyers continue to flock towards the UK property market in search of more stable investment opportunities.
It is no secret that Hong Kong is one of the most expensive places to buy property in the world, yet it has some of the lowest rental yields for those who choose to let their properties out. The lack of affordable housing is spurring on Hong Kong investors to seek property elsewhere, and the UK is one of those go-to locations.
According to one analysis by Global Property Guide, the average buying price in Hong Kong per square metre in US dollars is $28,570, as of November 2022. Yet with monthly rents of an average $2,149, this means rental yields come in at just 2.78%.
This compares with an average buying price in London – for a two-bedroom apartment – of $26,262 per square metre, according to the guide’s figures, raking in rents of an average $1,999 per month. This equates to average yields of 6.21%, vastly increasing the owner’s monthly returns.
Hong Kong property prices, while still sky-high, are in the midst of a slump, with house values falling by an average of 13.8% in the first 11 months of 2022, and a further decline expected in December. For investors, this makes the UK’s housing market even more appealing right now, as performance remains strong there.
Why choose UK property?
There is speculation that Hong Kong’s property market could be in for a revival in light of the reopening of China post-Covid and its relaxing of the rules there, which is expected to stimulate the economy. However, with ongoing tensions in the country, it seems Hong Kong could still have some tough times ahead.
By contrast, the UK’s housing market has flourished over the course of the pandemic, with demand for homes in both the buyer’s market and the renter’s market surging since 2020. House price inflation has begun to dampen now in a return to more realistic pricing levels, but most outlooks predict a return to growth shortly.
What’s more, the UK rental market remains exceedingly strong in terms of rental price rises and high tenant demand, which is good news for investors who opt to let their properties out. Particularly in parts of the north and the Midlands, no downturn is expected at all across some forecasts.
The exchange rate from Hong Kong dollar to British pound has also been particularly favourable of late, essentially resulting in a discount for those who purchase property in the UK.
The effect of the BN(O) visa
Undoubtedly, the changes made by the UK government to immigration rules for British Nationals (Overseas) has created a surge in the number of Hong Kongers purchasing property in the UK, whether for investment or as a home (or both).
Since the Home Office launched the BN(O) visa in January 2021, those considered British Nationals (Overseas) and their family members can now more easily apply to live, work and study in the UK, and this has led to a sharp rise in the number of people from Hong Kong investing in UK property.
According to Stuart Marshall of Liquid Expat Mortgages, the UK property market has long since attracted buyers from Hong Kong, but recent events have made the market even more appealing.
“Strong rental yields and capital growth offered by UK property have also served to compound the attractive nature of UK property for Hong Kong buyers,” he said. “But with so many Hong Kong residents looking to move to the UK, at least on a temporary basis, the demand for UK property from Hong Kong has grown even more.”
BuyAssociation has a long association with buyers from overseas, including Hong Kong, looking for UK property investment opportunities. Get in touch for more information.
