I have argued in this blog that property investment must consider wider economic factors. That is why I was interested to read a post in Knight Frank's Twitter feed which stated that the French are now the third largest buyers of prime central London properties.
This is not surprising. Why? Because the policies of France's Socialist administration hardly embrace the country's high income earners. The French government proposed a new 75% top rate of tax for those earning above 1m Euros. It was struck down by the French Constitutional Court because it would apply to individuals as opposed to households. David Cameron promised to 'roll out the red carpet' for wealthy French exiles. The French PM (Jean Marc Ayrault) promised that the French government would look again at the measure. Anglo / French spats aside, quite a few French celebrities (the most notable being Gerard Depardieu) have left France.
In light of the above, the fact that wealthy French people are flocking to London is hardly surprising. Why shouldn't they? 45% is better than 75% and at least British politicians do not seem so hostile to wealth creation. If I were French I know where I would want to live. Whilst the prime residential market, has seen most of the action, I would be surprised if it did not soon come to encompass other prime commercial assets- retail/ leisure developments, office buildings etc.
The above illustrates the importance of a favourable political climate to property investment. High taxing / regulating governments cannot be surprised if their citizens head to distant shores to store and invest their gold.
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