How the UK exports London property to Hong Kong

I interviewed Faisal Islam, Channel 4’s economics editor, last week. Subscribers can read the full interview in the magazine tomorrow. (And if you’re not already a subscriber, you can subscribe to MoneyWeek magazine.) But there was one snippet of conversation that I didn’t have room for.

Islam told me that he was at the speech George Osborne made about the economy turning the corner last month. The chancellor was, of course, mighty pleased with himself as he announced that the block in which he stood to address his media audience (the One Commercial Street site above Aldgate East station)“illustrates the story of our economy.”

However, what amused some of his audience more than the sight of Osborne in a hard hat was that half the flats above him had just been put on sale in a hotel in Hong Kong. They were not available for purchase by UK residents.

Faisal made the point that “it is possible that the effective growth in the housing stock in London is negative. All the new-build housing and much of the prime central London old-build has effectively been exported for foreigners as safe havens.” They aren’t used and we collect very little in the way of tax on them (see past posts on this). They are no longer really part of the UK’s housing stock.

That doesn’t seem like a particularly good thing. But I guess you can’t deny that it does indeed “illustrate the story of our economy”.