With the outlook worsening across the eurozone, a growing number of rich continental Europeans are looking to snap up trophy homes in London as they seek refuge from the deepening turmoil.
As fears intensified throughout May, many took to their phones and laptops in search of places of relative safety to store their wealth. The result: a surge in the number of online searches by mainland Europeans looking for property in desirable London postcodes.
“The market is being driven by weakness in the eurozone,” says Charlie Bubear of Savills’ Chelsea office. “Around 50 per cent of our buyers in the year to date have been driven by eurozone fears, seeking sanctuary for their money.”
Figures from Knight Frank, compiled exclusively for the Financial Times, show significant increases in the numbers of Spanish, French and Greeks searching online for prime London properties in the past two months.
As Spain’s debt crisis worsened in April and May, web searches by prospective Spanish buyers increased the most out of all European countries, rising 40 per cent from March.
A similar trend has been identified across other eurozone countries. Rich Greeks turned to London as concerns grew that their home country was heading towards a dramatic exit from the euro. From March to May, interest from Greek buyers rose 34 per cent, compared with a 13 per cent rise since January.
Figures from Savills paint a similar picture. In the past four weeks, it has experienced a 50 per cent uplift in searches for expensive London homes from Greek buyers.
Mark Sommerville, manager at Hamptons International’s Notting Hill branch, says he has seen some Greek buyers rush to secure property deals as the headlines got worse. “After the announcement of a possible Greek default, we had a Greek buyer exchange blind 48 hours after having his offer accepted on a £1m purchase, which was full asking price.”
In spite of this recent rise in interest, some believe Greek demand has dropped off since October/November.
“We saw the big surge in Greek buyers in 2011, when we estimate they spent upwards of £300m on London property, but the clear inference from our figures is that the Greek surge has passed,” says Liam Bailey of Knight Frank.
According to Knight Frank, Greece’s share of European online searches peaked at 2.7 per cent in May 2011 and has now dipped to 1.3 per cent. Overall searches from Greece were down 28 per cent year-on-year in May.
If the demand from Greece has ebbed, the French story stands in stark contrast. French interest in London property hit a 12-month high last month as the victory of François Hollande, the first socialist French president for 17 years, spurred a panic among the country’s rich.
A surge in the number of online searches from prospective French buyers was first seen in February, as Hollande developed his “soak the rich” rhetoric and announced plans for a tax rate of 75 per cent on income above €1m.
Knight Frank’s data shows a 34 per cent rise in the number of online searches for London property between March and May, and other agents report a rise in French interest. Two days after Hollande’s election, Winkworth’s South Kensington office reported a 50 per cent increase in inquiries from France.
“I had two people registering this week, both from France, who also wanted to agree a sale this week,” says Christian Warman of Savills Sloane Street. “There is no messing about in getting the deals done.”
Meanwhile Stuart Baldock of Hindle & Baldock, a buying agent in France, says many of the people he has spoken to since the elections, from his lawyer to his grocer, are considering leaving the country.
However, most agents admit the interest has not yet resulted in a significant increase in sales. “What you’ve got at the moment are people considering their options,” says Richard Barber, partner at London-based agent WA Ellis. “It’s easy for somebody to surf the web at home and think ‘maybe I should sell up and move to London because it’s a safe bet’. But we’re not seeing particularly large number of transactions from French buyers.”
Ed Mead of London-based agent Douglas & Gordon agrees: “We’re seeing almost 40 per cent more French people registering to look but they’re telling us they’re waiting to see what Hollande actually does.”
The French who are buying in London typically favour South Kensington, often dubbed the 21st arrondissement of Paris, and home of the Lycée Français Charles de Gaulle. Chelsea and Fulham are also popular.
Savills is currently marketing a three-bedroom property for £2.25m in Onslow Square, which has already had a number of French inquiries. French buyers have also shown interest in a five-bedroom period house on Epple Road in Fulham, for £1.295m. It is close to Parsons Green and the French school L’école Marie d’Orliac.
Other continental Europeans remain a strong force in the market. While inquiries from Italians have not spiked in the past few months, they have seen the biggest rise in online search volumes compared with last May – up 131 per cent. In comparison, French searches rose 44 per cent, Portuguese 53 per cent and Spanish searches were up 72 per cent.
Buyers from Europe already represent a bigger portion of the prime London market than three years ago, and agents believe the rise in inquiries is likely to result in more sales to eurozone buyers over the next few months.
“There is no doubt that the performance of the eurozone is impacting on the prime central London market,” says Bailey. From 2007 to 2009, European buyers’ total spend was around 10 per cent of the total global spend in prime central London. In 2010, it rose to 15 per cent and in 2011 to just above 20 per cent, where it stands today.
“The European-based buyers are on a buying mission,” says Bubear. “They are doing their research, coming over and moving very quickly. If they have the means to do the deal within five to 10 days they will.”
Tanya Powley is the FT’s mortgage and property reporter