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Benefits of Buying London Property for Buy-to-Let Investors in Hong Kong

The attraction of Hong Kongers towards the UK and its capital isn’t a new love affair. Investors from Asia’s World City make up the most valuable portfolio of overseas homeowners across England and Wales. With total investments worth nearly £11bn, Hong Kongers own more than a 13% chunk of the total foreign investments in the UK property market, and their interest in London is reaching new levels. But what is fuelling this growing appetite for property acquisition in the thriving financial and cultural Metropolis?

Buying London Property for Buy-to-Let Investors in Hong Kong

In this blog, we dive deep into discovering the several benefits associated with investing in London, focusing on the buy-to-let strategy of many Hong Kong-based investors.

High rental demand

High rental demand

London witnessed immense pressure on its rental market as demand outstripped supply in most parts of the city in the years following the pandemic. The resumption of work-from-office and on-site courses in leading universities contributed to the increased demand from professionals and students. With overall rents predicted to shoot up by 6% in 2024, overseas property investors are snapping up new properties as soon as they launch. Rightmove’s rental tracker revealed a robust growth of over 12% in rent collections last year.

Attractive capital growth potential

Marked by a steady increase in house prices, average capital growth in London stands at more than 70% for the last 10 years. Some sought-after neighbourhoods have also recorded growth of over 100% for the same period. Sustained growth over the last three months of 2023 further intensified demand for properties in lucrative areas. Hong Kongers venturing into the London property market as buy-to-let investors can maximise their returns by leveraging the increased rental demand and long-term capital appreciation.

A cultural and education hub

Ranked as the best student city in the world by leading magazines and business journals, London welcomes over 100,000 students each year seeking enrolment in top universities. These universities include renowned names such as the London School of Economics (LSE), Imperial College London (ICL), University College London (UCL) and King’s College London, to name a few. The presence of a large foreign student population adds to the demand for rental accommodation, with several areas witnessing attractive yields of up to 6%.

Cultural and education hub

The diverse nationalities and ethnicities add a cultural vibrancy, making the UK capital an attractive education and work destination. This diversity is also witnessed in the property market as buyers can choose from stylish studios to high-end apartments that best suit their investment goals.

In addition to having several world-class universities, the UK is also considered safe by parents wanting to send their children abroad for education. Ranked by the World Bank as a high-income country with the least firearm-related incidents, the UK performs much better than the US and Canada on safety indices.

A diversified investment portfolio

For overseas investors from Hong Kong, the London property market is a safe asset class for multiple reasons. While stability, growth potential and diversity are the key drivers for investment, London provides a well-connected global economy attracting professionals, families and students from different countries and continents. By diversifying their investments in overseas properties, investors not only maximise their potential for returns but also safeguard their investments from market risks and volatility associated with investing in a single market and asset class. Here are some of the long-term benefits of investing in a London property for Hong Kong buyers.

The currency exchange benefit

Although the property market of London is one of the most resilient investment avenues, fluctuations in the exchange rate between the Hong Kong dollar (HKD) and the British pound (GBP) can contribute significantly to the potential profits from property lettings and sales. Many Hong Kong investors are typically cash buyers, and investing in a London property can be lucrative when the HKD strengthens against the GBP. This favourable currency exchange rate scenario can enhance the overall return on investment.

Given the many benefits of investing in London properties, Hong Kong investors have a positive outlook towards buying and letting properties in the UK capital. While high rental demand and long-term capital appreciation are primary benefits, mitigating risk through diversification, favourable currency exchange rates and the sheer status of London as a thriving hub of cultural diversity and education excellence are encouraging for investors in Hong Kong.

As a dedicated lettings and estate agent with a legacy spanning over six decades, we have successfully helped many investors realise their buy-to-let aspirations in London. With our full range of lettings and property management services, we can help you find the right property in London and maximise it to its full potential. Get in touch with us to learn more about investing in London properties.

(source for Hong Kong property data in the UK and price growth figures: UK Land Registry)


About the Author

With over 60 years of experience in London market, Benham and Reeves offers a comprehensive one-stop service which includes London property sales (purchase and selling) and full letting and management services to investors. Benham and Reeves Hong Kong SAR office was established in 1995 to provide real estate agency services to Hong Kong buyers, sellers and landlords in regards to all their London property needs.