London Daily

Focus on the big picture.
Saturday, May 31, 2025

London’s Luxury New Home Slump Stings Asian Developers

London’s Luxury New Home Slump Stings Asian Developers

On the edge of London’s Canary Wharf district, the tallest residential skyscraper in western Europe was due to open this year. The Spire London’s hype gushed about the possibility of drones delivering food to residents in between their visits to the tower’s cinema and swimming pool.

Instead, all that’s rising from the board-up site owned by Chinese developer Greenland Holdings Corp. is weeds.

It’s just one cautionary tale for Asian homebuilders who flocked to the city, expecting overseas investors to follow them and buy apartments that locals can’t afford or don’t want. After accounting for two-thirds of land sales by value as recently as 2017, developers from the region have been largely absent since. They failed to buy a single plot of land in the capital through July this year, according to data compiled by Real Capital Analytics Inc.


Weeds grow at The Spire London site next to the Canary Wharf district, Dec. 11.


In Greenland’s case, the developer reportedly paused the project in 2018 as the outlook for London property worsened and tall buildings came under increased scrutiny following the Grenfell tower fire that killed 72 people.

Tricky Market’


“From an international developer standpoint, London is a tricky market to crack,” said Martin Zdravkov, head of U.K. residential investment at LaSalle Investment Management. “The last four or five years have been difficult ones.”

Developers from Asia struggled to secure sales at some projects as the fallout from the 2016 vote to leave the European Union, changing rules around building design and more taxes on foreign buyers damped demand. Now, they face a new headwind: apartment values are falling as the pandemic leads many to reassess where they want to live.

The value of those homes across London fell 40,000 pounds ($54,400) in the year through September, despite a broader U.K. housing boom, as buyers prioritize larger homes with gardens. New home sales in central London are on track to fall to the lowest since 2011, a contrast to the wider city where purchases are up on last year, according to researcher Molior London.

The market for cheaper new homes is stronger because of a stamp duty sales tax holiday and the government’s Help to Buy program, which provides loans for purchasers who only have a small down payment on properties sold for as much as 600,000 pounds.


Tax Rises


On Grosvenor Square in London’s Mayfair district, Indian developer Lodha has agreed the disposal of about half of the luxury apartments it’s building at the former Canadian embassy. The homes, replete with an on-site private spa and billiards room, were first offered for sale in 2017. Tax increases and Brexit have made future investment difficult, Gabriel York, co-head of the firm’s U.K. unit, said in an interview.

“It’s affected customers’ behaviors, appetites, desires,” he said in October. “Every time one of these changes is made it causes a six-month pause, as people reflect, ‘what does that now mean for what I want to do.’” The firm still believes in central London, he said.

Asian developers were drawn to the U.K. as the pound weakened following the Brexit vote, while land prices also fell slightly as the economic outlook worsened, according to James Barton, a partner at broker Knight Frank LLP, who traveled to the region at the time to source buyers for sites in the capital.

Even earlier, one of Hong Kong’s richest families took a bite. In west London, the second phase of the Earl’s Court Lillie Square project, part-owned by members of the Kwok family, has yet to sell out -- five years after the 186 homes were first offered for sale. South of the River Thames, the Malaysian developer of apartments and offices on the Battersea Power Station site recently took an impairment charge of 156 million pounds on the project, which is valued at about 9 billion pounds.

In St. John’s Wood, a district favored by American bankers, construction hasn’t even started at a site bought by Malaysian billionaire T. Ananda Krishnan in 2011 for a reported 250 million pounds. There are weeds growing at the front of the plot, a former barracks.

Larger developments like Lillie Square and Battersea are suffering because of the tax changes for overseas buyers, according to Camilla Dell, managing partner at buying agent Black Brick Property Solutions. “That part of the new development market in London is challenged and has the potential for price falls,” she said.

Greenland, which has almost sold out its Ram Quarter project in Wandsworth, did not reply to questions. Kwok’s flagship developer Sun Hung Kai Properties Ltd. declined to comment and Krishnan wasn’t reachable.


Hong Kong Boost


There is one big positive trend for Asian-based developers. The U.K. will introduce a new route to citizenship for almost 3 million people in Hong Kong in January, which may boost demand.

The number of new London homes sold overseas rose to 860 in the third quarter, a 40% increase on the fourth quarter of last year, the last period before the pandemic disrupted sales, according to Molior.

Read more: U.K. Grants Hongkongers 5 Passports a Minute as Exodus Looms

Still, missing out on the rush to purchase homes during the stamp duty tax holiday could prove damaging for some developers, given the outlook for sales next year is poor. An additional 2% levy on overseas buyers is due to be introduced in April, the same month the jobs furlough support programs that have kept millions in employment are due to end.

Brexit is also expected to hurt the economy after Britain formally leaves the EU’s single market on Jan. 1. Bloomberg Economics estimates the new frictions mean growth will be 0.5 percentage points lower a year for the next decade than if the U.K. had stayed in the bloc.

Some projects would have struggled regardless because developers read the market wrongly or didn’t pick the right location, according to Peter Rees, Professor of Places & City Planning at University College London.

“Brexit and Covid-19 are being used as convenient excuses for the failure of ill-conceived development projects,” he said.

Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Trump Threatens 25% Tariff on iPhones Amid Dispute with Apple CEO
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
Liverpool Car Ramming Incident Leaves Multiple Injured
Australia Faces Immigration Debate Following Labor Party Victory
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Macron Dismisses Viral Video of Wife's Gesture as Playful Banter
Cleveland Clinic Study Questions Effectiveness of Recent Flu Vaccine
Netanyahu Accuses Starmer of Siding with Hamas
Junior Doctors Threaten Strike Over 4% Pay Offer
Labour MPs Urge Chancellor to Tax Wealthy Over Cutting Welfare
Publication of UK Child Poverty Strategy Delayed Until Autumn
France Detains UK Fishing Vessel Amid Post-Brexit Tensions
Calls Grow to Resume Syrian Asylum Claims in UK
Nigel Farage Pledges to Reinstate Winter Fuel Payments
Boris and Carrie Johnson Welcome Daughter Poppy
×