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Asian investor appetite for UK property to outweigh privacy concerns of planned ownership register
Brief:London’s luxury property market in particular is expected to favour long-term foreign investors in 2018, as asking prices begin to recover and buyers take advantage of a weakened sterling, offsetting concerns about any loss of confidentiality.
 
Foreign companies own around 100,000 properties in England and Wales, including over 44,000 in London, according to UK government figures. But the current lack of ownership transparency has led to suggestions UK property is being used as a mechanism for tax evasion and money laundering.
 
Between 2004 and 2014 Britain found over £180 million (US$256 million) of real estate suspected to be linked to corruption, with 75 per cent of the properties in the name of overseas companies, hiding the real owners, according to the Department for Business, Energy and Industrial Strategy.
 
For some investors with legitimate commercial reasons for wanting to hide ultimate beneficial ownership, the register “will be a nuisance”, said Nick Saner, partner in the real estate team of Allen & Overy law firm in London. 
 
“It will undoubtedly impose a greater administration burden on both new and existing overseas companies in relation to their initial investment or existing investment and then keeping the register up to date,” he said. 
 
Nevertheless, the register is not expected to alter the risk-return equation of UK properties, said Sigrid Zialcita, managing director of research for the Asia-Pacific region at commercial real estate company Cushman & Wakefield. 
 
“The measure is not aimed at curbing foreign investments into real estate,” she said. “With risks from Brexit and other policy changes already priced in, this additional requirement does not detract from the market’s current underlying fundamentals.”
 
London’s luxury property market in particular is expected to favour long-term foreign investors in 2018, as asking prices begin to recover and buyers take advantage of a weakened sterling, offsetting concerns about any loss of confidentiality.
 
The average fall in prime property prices in central London was just 0.7 per cent year on year for 2017, compared to a 6.3 per cent decline in 2016, according to property agent Knight Frank.
 
Separately, Savills has predicted 20 per cent growth over the next five years in London’s luxury property market, while in January London was voted the No 1 global city for real estate investment in 2018 by members of the Association of Foreign Investors in Real Estate (AFIRE).
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