Fortress Intellect

Much ado about nothing. Why we’re quaking amid an uncertain future in the face of an actually resounding certainty – Brexit won’t affect our biggest market.

By Lucas Grant, New Homes Consultant at deverellsmith

After receiving a number of calls following my insight post the previous week highlighting Knight Frank’s assertion that the London property market is its greatest asset, I reached out to my clients to discuss what they believed to be its neighbouring stronghold: international students and higher education.

A resounding 100% of my clients asserted that it is the UK’s higher education institutions that ensure the overseas investment market will keep the property industry not just afloat, but watertight amid a seemingly inexorable departure from the EU. As of 2017/18, international enrolment at UK universities increased by 3.6% compared to the previous year; of which, a grand 38% of the 458,520 registered international students in the UK were from Hong Kong, China, India, Singapore and the US.

Unsurprisingly, China continues to be the top country of origin of international students in the UK. As of 2017/18, 106,530 Chinese students were enrolled at UK universities.

It is not so astonishing then, to hear a weighted 60/40 split on the number of foreign buyers and investors trumping domestic interest. The majority of these buyers stemming from China, as aforementioned, hone in on New Homes properties for their student children as the government plans to introduce a two year post-study work visa for all international students following successful completion of their undergraduate studies.

The initiative, set to take effect for the 2020/21 intake of students, is aimed at retaining those who have studied specifically within science, technology and research: much of which the behemoths of the capital’s main institutions (LSE, UCL, King’s) specialise in.

As I write, breaking news of a Brexit setback to January has been announced, doing little in the way of assuaging doubt and, even less so, in asserting clarity in what we can expect within any industry in the coming years.

Notwithstanding, recent reports from Molior have confirmed Prime Central London as the best performing of all zones within the M25, with latest figures released this past quarter detailing a total of 2,442 construction starts during the first nine months of 2019 – 22% up pro-rata on 2018. Coincidingly, sales are also up pro-rata against 2018 – there were 2,518 sales during the first nine months of 2019.

Throughout the capital, the end of Q3 reported a total of 5,156 units sold which illustrates an increase on the quarterly average for the previous year, were sales were just under 4,700 units.

It is within these super prime localities that the discerning investor hones in to profit both in terms of securing their lackadaisical student children with a home, and in acquiring a piece of British land which, for the most part, is set to continue on an upward trajectory in terms of price and favourability.

The take home, then, is that our market, our luxury, new build, ostentatious market, will stand the test of Brexit. Why? Principally chief buyers and investors have no concern with the restrictions of the EU – themselves not forming part of that constituent. As much as we wish to blame ‘uncertainty’ for this or ‘uncertainty’ for that, we seldom stop to observe its parameters and thus the extent of what Brexit will actually mean for the investor market.

This does, however, behove us to pause and ask the grander question – what does this mean to the domestic market and the domestic buyer trying to buy locally? I’ll talk about that in the next issue!

Lucas is a consultant on the New Homes desk specialising within C-Level Interim and consultancy roles in sales, whilst having a strong focus on Completions and Aftercare (entry to directorate), too. He is a graduate of the University of Warwick and has spent his career within Business Development, Client Relationship Management and Sales.

Lucas is at hand to discuss current market trends within sales and completions across the capital, as well as being able to advise on employee procurement and retention. Contact Lucas directly at [email protected].