London tops investment list

The Momentum UK Team 15 January 2014

London is one of the “top” cities in the world for foreign investment opportunities, according to a survey by the Association of Foreign Investors in Real Estate (AFIRE).

This is the first time since the recession hit 5 years ago that London has topped the AFIRE investors’ list. The four other cities in the list were all in the USA, and were respectively: New York, San Francisco, Houston and Los Angeles.

Members of AFIRE claim to have as much as $2 trillion in property across the world. Investors based in 21 countries around the globe were surveyed to put together the list.

The newly elected Chairman of AFIRE said:

"Continued and growing interest in the US real estate markets reflects fully functioning capital markets for both debt and equity that provide access to a broad range of investment opportunities."

Founded in 1988, AFIRE is a non-profit representing the real estate interests of nearly 200 investment organisations around the world.

Europe is coming into the limelight in the property investment world, and Spain was earmarked as the second best country for capital appreciation. The United States, Germany, the UK, Canada and Australia were pegged by the report as the five most stable countries for foreign investment.

Latin America dominated the emerging places list, with: Brazil, Mexico, Colombia and Peru all securing a place in the top five, although China nabbed the sought after first place. Mexico has been a regular in the top five of the emerging list since 2009.

From April 2015 owners of UK properties that are non-residents will be charged Capital Gains Tax when they sell, said Chancellor of the Exchequer, George Osborne in the Autumn Statement. Capital Gains Tax is already charged to UK-residents who make a profit when they sell a property that is not their primary living address.

It is thought that foreign investment is at the root of the current property price increase in London, and that although Capital Gains Tax may deter some, many investors will not be put off as currency exchange rates may go in their favour when they sell.

Investment in commercial properties in the capital is also flourishing and has reached its highest figure in six years, according to property consultants Cushman & Wakefield. Although the current peak of £19.9 billion is still lower than the markets pre-recession value of £20.54 billion.