Wealthy Nigerians rekindle demand for London property market
An upswing of real estate development activities has hit the London real estate market, following renewed interest by wealthy Africans, especially Nigerians and property developers on the south bank of the River Thames.
With a weak naira, the majority of buyers from Nigeria are excited not just by the capital appreciation London offers, but also the good payment and mortgage plans available from UK banks and increasingly local banks like Access Bank.
Cultural ties remain strong between London and Lagos and at the end of last year, wealthy Africans were spending almost £4million a week on London property. Harrods Estates’ prime central London office in Mayfair has reported a 400 per cent rise in sales to African buyers in 2015, compared with the previous 12 months.
The Guardian gathered that West African buyers only account for 1.5 per cent of transactions in prime London market, spending between £15million and £25million on each property. Buyers are from Nigeria, Ghana, Congo, gabon, Cameroon and Senegal.
The reasons for African interest include the stability of the UK’s economy and political institutions. A 2013 report from property consultancy Savills contrasted London’s residential sector with African markets, which “can be volatile with political unrest of a sometimes extreme nature” and can also suffer from “corruption, lack of regulation and a lack of transparency”.
In addition, some African nations also have longstanding Commonwealth connections with the UK, while a large number of opinion-formers have personal links. The Nigerian Embassy in London calculates that Nigerian nationals now spend over $446 million per year on fees, tutoring and accommodation at British schools and university. “Many wealthy Nigerians were UK-educated and send children to school here, for example,” says Camilla Dell, of Black Brick, a London-based buying agency, which — since 2007 — has seen 44 per cent of its clients come from Africa.
Traditionally popular areas for wealthy buyers, such as Knightsbridge and Regent’s Park, have seen strong growth in capital values in recent years, but many developers believe that other central areas, which are experiencing urban regeneration, will see greater demand and steeper price rises in the coming years.
Prime London property remained an attractive proposition for African investors in 2015, with total returns in prime central and prime outer London markedly higher than other asset classes despite the backdrop of global economic uncertainties, according to a recent Knight Frank London report.
The report forecast cumulative growth of 22 per cent on London residential prices between 2015 and 2019 as demand continues to exceed supply. Prime residential yields currently stand at around 2.92 percent and are predicted to rise following the recent General Election in the UK.
Battersea Power Station is an example of a development in an increasingly popular area on the south bank of the River Thames, only 10 minutes’ drive from upmarket Knightsbridge, and a mere walk to Chelsea.
The £8 billion project is essentially a vibrant new urban quarter on the site of a decommissioned coal-fired power station in a previously industrial area of the British capital. The development is ofering 4,000 luxury apartments designed by Foster and Partners and Gehry Partners including offices, shops and parkland.
This sought after area is becoming a new green oasis in central London, with 20 acres of open space across the development, including a six acre park created next to the river, all connected by walking and cycle lanes, a river bus services and a brand new Zone 1 underground station.
The project is expected to be completed in 2025, but there will be phased completion across the site – residents will have access to Phase 1 Circus West from the end of 2016 and the village featuring a mix of retailers will open to the public in early 2017.
“It will offer places to live, work, and shop as well as cultural and event spaces interspersed with community facilities, open space, parks, and the revitalisation of the Power Station itself as well as transform the waterfront site into an exciting, authentic and attractive new destination for residents and visitors alike around the clock,” according to Rob Tincknell, Chief Executive Officer of Battersea Power Station Development Company.
He said: “The new generation of overseas buyer is much more adventurous.
“Many investors now realise that the best value is to be found in luxury residential in areas that are being redeveloped, and are very close to London’s key business, shopping and entertainment hubs.”
He told The Guardian, “I think with the current situation in Nigeria, private investors will be looking further afield to get the returns they want. The London real estate market is seen very much as a safe haven for investors from Nigeria.
“A recent Knight Frank London report forecast cumulative growth of 22 per cent on London residential prices between 2015 and 2019 as demand continues to exceed supply.”
“If you’re a buyer from Nigeria, London is a good prospect for those seeking stable, long-term returns,” said Richard Vedelago, CEO at Wrotham Windsor, the leading London real estate advisory firm for West Africans .
“The fundamentals of the London property market remain strong, due to a recovering economy, the fact that London is still thriving as a top financial centre, and the relative low supply of new projects in central areas.”