London’s reputation as a safe haven for international property investment threatens to transform large parts of the city into “ghost towns” as prime real estate is snapped up by affluent absentee owners from abroad.
Christian Ulbrich, the European head of Jones Lang LaSalle, told the UK’s Daily Telegraph that London has become the “safe haven of the world” for property investment, with a “whole spectrum” of international buyers drawn to the British capital by its combination of quality living conditions and strong economic opportunities.
This international appeal threatens, however, to transform some of the most exclusive areas of the UK capital into “ghost towns,” as overseas investors purchase expensive residential properties purely as safe haven investments, and then refrain from either inhabiting the homes themselves or even renting them out to denizens of the city.
Ulbrich said this has now emerged as a “growing trend” in affluent suburbs of London, with Mayfair often a dark and lifeless place in the evenings due to lack of inhabitants.
He added that this is currently a difficult trend to reverse, as even taxes on vacant properties, like those current implemented in Germany, will fail to act as deterrent for the types of super-affluent investors who are willing to purchase inner city flats in London for as much as 10 million pounds.
This is not the first time people have sounded concerns about wealthy absentee homeowners from abroad sapping the life from parts of the city. In August 2013, Paul Dimoldenberg, leader of the Labour opposition for Westminster Council, noted that super-rich investors were buying expensive homes in London to serve purely as holiday homes, spending only two or so weeks in the city during the summer.
Their absence from London during the rest of the year deprives local businesses of much-needed economic activity, while the heavy focus of their exorbitant purchasing power on real estate has pushed price levels beyond a reasonable threshold for locals.
According to Ulbrich, London’s popularity with international investors is set to push the average price of homes in London to beyond half a million pounds next year, while the latest global survey by Demografia International names London as the least affordable city in Europe, as well as the 10th least affordable city in the world.