News

 

UK Holmes - 2020 UK Property Survey of Hongkongers


20 Dec 2020

 

The launch of the British National Overseas (BNO) visa scheme to 5.4m eligible Hongkongers was forecast to attract 150,000 applicants in the first year. By mid-April 2021, just 10 weeks post launch, the UK government was well on the way to achieving its target with 35,000 applications registered. This result is consistent with the findings of a 2020 UK Holmes survey of Hongkongers intending to purchase property in the UK.

 

Of the approximately 600 respondents, 81% indicated that they were considering applying for the BNO visa. However, this strong interest in forging a migration route to the UK did not necessarily translate into an immediate intent to purchase a property for owner-occupation purposes. On the question of primary purpose in buying a UK property we found:

Primary Buying Objective

Percentage

Investment purposes only

16.9%

Initially investment, potential to occupy later

42.4%

Occupy for self/family

34.2%

Occupy for child at university

6.5%

Total

100%

 

The backdrop to this question was that 45.2% of respondents were intending to purchase a UK property within the next 12 months, 27.8% within the next one to two years and the remaining 27% in two years plus.

 

We learned that the majority of respondents were intending to make their property purchase with an eye to the long-term. On the question of how long they anticipated owning this UK property we discovered:

Property Ownership Tenure

Percentage

<3 years

4.8%

3-5 years

26.2%

5-10 years

44.7%

10+ years

24.3%

Total

100%

 

The single largest demographic represented was 40-49 years (40.6%), followed by those in the 30-39 band (28.8%) and then those aged 50-59 (16.7%). The majority are married (68.5%) or co-habiting (12.1%) and nearly three quarters (71%) have at least one child. Our audience was well represented in the occupations of finance (13.7%), business management & administration (13.5%), information technology (11.1%) and sales & marketing (10.6%).  They are typically well-remunerated:

Annual Household Income

Percentage

<HKD750k

23.8%

HKD750k – HKD1.0m.

32%

HKD1.0m. – HKD1.5m.

22.2%

HKD1.5m. – HKD2.0m

13%

HKD2.0m.+

9%

Total

100%

 

Upon further analysis we uncovered a significant distinction on this metric between those intending to purchase in London or elsewhere in the UK. Taken as a subset, 34.4% of those looking to buy a home in London earn in excess of HKD1.5m. compared to just 13.2% of those purchasing in other UK cities. Given that London is the most expensive real-estate precinct in the UK with an average property price hovering around the £500k mark, this outcome is not surprising.

 

Approximately four in five respondents either own their home in Hong Kong outright or are in the process of buying it. Of the 35% who own an investment property, the majority (61.4%) had purchased in Hong Kong with the UK being the next most popular destination (28.2%) followed by Australia (14.8%) and Singapore (13.4%).

 

Consistent with our findings that higher income earners are gravitating towards purchasing in London, we were also able to establish that those looking to buy in London are anticipating having to pay more. The respective target property values of the two cohorts were:

Target Property Value

London

Other UK Cities

<£300k

23.8%

40.6%

£300k - £500k

37.8%

26.4%

£500k - £750k

11.9%

8.5%

£750k - £1.0m.

9.3%

7.5%

£1.0m. - £1.5m.

7.9%

12.3%

>£1.5m.

9.3%

4.7%

Total

100%

100%

 

Whilst respondents were generally clear on the question of which city in the UK they were considering purchasing in, only 17.8% had a specific precinct or district in mind. The primary factors influencing their choice of location were financial benefits (35.7%), school access (26.1%) and environment & neighborhood (21.7%).

 

On the question of what style of property our respondents were likely to purchase, there was a relatively even spread of responses:

Proposed Property Style

Percentage

Flat – purpose built

53.7%

Flat – part of converted house

31.3%

Terraced house

52.3%

Semi-detached house

54.8%

Bungalow (freestanding house)

24.3%

 
Those intending to buy in London were more inclined to purchase a purpose built flat (57.6%) compared to those looking elsewhere (51.9%). For the cohort intending to apply for a BNO visa, the results were skewed in favor of either a terraced house (61.4%) or semi-detached house (62.8%). The corresponding figure for those not applying for the visa was 42% for each housing style.

 

Overall, 26% of respondents indicated a preference for buying off-the-plan whilst 62.5% were in favor of buying a completed new build property. But the highest response recorded (75.5%) was for those buying an established property. Those Hongkongers who already have an investment property in the UK have a greater propensity to buy off-the-plan (45.5%) compared to those without direct experience in the UK market (26.8%).

 

On the question of how they anticipate buying property in the UK, the following responses were recorded:

Preferred Method of Buying Property

Percentage

New development launch in Hong Kong

35.2%

Hong Kong real-estate firm

28.1%

UK real-estate firm

38.6%

Hong Kong property buying agent

31.9%

UK property buying agent

65.5%

 

For those intending to buy property in London, the positive sentiment expressed for using a UK property buying agent climbs to 80.8%. By contrast, for those looking to buy in other UK cities the number is a more modest 52.8%. Given the complexity of the London property market, this value judgment on the part of those respondents intending to purchase a home in the national capital is intrinsically sound.

 

Analysis.

The picture that emerges from this survey is one characterized by middle-class Hongkongers astutely assessing their property investment options in the UK. Whilst a significant majority of respondents indicated that they intend to apply for the BNO visa, for most Hongkongers the purpose in buying a UK property is primarily for investment purposes, at least in the short term.

 

The London property market is a renowned safe haven that through political, economic and social turmoil attracts investment globally. In the aftermath of the 2016 Brexit vote astute offshore investors snapped up property in Prime Central London (PCL) at discounts of up to 30% factoring in reductions off the asking price and favorable exchange rate movements.

 

The overwhelming majority of those looking to buy property in the UK are home-owners in Hong Kong, with a significant minority also owning investment properties. One of the questions which would-be migrants to the UK via the BNO visa will face is whether they hold onto their property holdings in Hong Kong.

 

In making this decision, there are a range of issues that need to be considered: the accommodation needs of family members remaining in Hong Kong, the potential to return home at a point in the future and, of course, financial considerations related to cashflow requirements and future capital gains. It is a complex picture that requires careful consideration. As part of this process, they would be well advised to talk to a UK based taxation accountant to understand the local regulatory environment.

 

The survey found that Hongkongers looking to invest in the UK are considering a variety of property styles and purchase options. Terraced and semi-detached homes were as popular as flats with those intending to buy off-the-plan being in a minority. This outcome is likely skewed by one key factor: the high percentage of respondents who are considering migrating to the UK.

 

The London property market in 2020 was a picture of distinct contrasts. Generally, Outer London boroughs prospered at the expense of those in Inner London. Similarly, the value of homes that offered enhanced living and outdoor space flourished whilst the market for flats was depressed. One of the key drivers was the experience of homebuyers working from home through lockdown. But there were a variety of other factors that produced a patchwork quilt of property winners and losers across the London market.

 

On the question of how Hongkongers intend to buy their UK property, there was a notable schism on two key metrics: geography and industry profession. In both instances, a clear preference was communicated. Survey respondents expressed a desire to deal with UK based representatives and favored seeking the assistance of a property buying agent rather than real-estate agents.

 

The legal mechanics of the UK property market are different to those of Hong Kong. This is potentially one of the factors intuitively represented in the response of the 81% of Hongkongers whose intention is to engage a UK property buying agent in buying their London home. Whilst they are likely to be experienced in financial markets and savvy property investors, they recognize that leveraging independent, local market expertise is critical to achieving their London property goals.

 

UK Holmes gratefully acknowledges the assistance of the 597 Hongkongers whose input formed the basis of these key insights.

 

 

About UK Holmes
UK Holmes is a London-based residential property buying agent providing turnkey solutions for offshore buyers. UK Holmesemploys London’s House Detective, a property professional with 12 years’ experience. His in-depth knowledge of how to successfully navigate the complexities and pitfalls of the London market to find customers their ideal home provides true peace of mind. To learn more, please visit www.ukholmes.com.