LONDON IS NO LONGER CALLING

Where have all the Hong Kong investors gone? In the mid-1990s about one in 10 new homes built in central London's most desirable areas were bought by Hong Kong people, making the British property market their favourite outside of East Asia. Now there are barely any new investors coming to Britain.

Top estate agency Savills, property finder Black Brick and investment property management company Pineflat have had no Hong Kong investors looking for property in the British capital this year. Estate agent Hurford Salvi Carr has had only "a handful".

The decline in Hong Kong investment has been steady. According to estate agency Knight Frank, last year only 3 per cent of buyers in prime central London came from the Asia-Pacific, and Hong Kong buyers were only a fraction of that.

A few developers have managed sales of apartments at exhibitions in Hong Kong this year. Berkeley Homes sold 12 apartments at its City Quarter project in London's East End during the summer and St George sold about 40 flats at several developments. But this is nothing compared with the heyday of 1997 when all 450 flats at St George's Metro Central Heights development in Elephant and Castle, south London, were sold to Hong Kong buyers.

Perceptions that Britain's property market slump may be long and severe are partly to blame for the dearth in demand from Hong Kong.

"The British property market turned in September 2007 and has since lost 15 per cent of its value," said David Salvi, partner at Hurford Salvi Carr.

"Although this now represents an opportunity to purchase prime London property at discounted rates from 2007 prices, negative press reports have resulted in international buyers looking to other countries to invest."

According to Camilla Dell, managing director of Black Brick, investors are playing safe. "Our investment clients have tended to put their searches on hold for the time being due to the softening market conditions in London," she said. "They are waiting to see the market fall further and bottom out before buying again."

Mr Salvi said Hong Kong investors who took the plunge bought off-plan properties in the ,000 to illion (HK$7 million to HK$28 million) range. They were banking on an early recovery in the housing market.

"They tend to have a large appetite for off-plan developments, where the initial outlay is 10 per cent or less, with the rest payable in stages over a few years," he said.

From - The South China Morning Post