Analysis report reveals why Chinese property investors are buying in the UK
Improved trade relations between the UK and China along with an increasing number of Chinese children being educated in top schools are among the key factors driving Chinese investment in prime central London property.
Research by prime central London agency W.A Ellis also says that the liberalisation of China’s currency, the Renminbi (RMB), the rising price of new homes in China’s first tier cities and a growth in the number of Chinese high net worth individuals seeking offshore investments, is adding to the attraction of London real estate.
The firm’s latest analysis report points out that and estimated £3.5 billion was spent on UK property in 2013 by Chinese investors and the current strength of the Chinese currency means that the cost of buying property assets in central London is 8% cheaper than it was six years ago.
It also says that research in the first quarter of 2013 by Hong Kong based property agency Centaline highlighted the impact of the 15% tax introduced on foreigners investing in Hong Kong, recording that sales of luxury houses to mainland Chinese investors had fallen to a four year low.
The importance of education is cited in a recent report by the Chinese magazine Hurun which revealed that 85% of high net worth individuals were planning on sending their children abroad to study and 22% said that the UK was their preferred choice.
And some 37% of independent primary and secondary school children in the UK have parents domiciled in China or Hong Kong.
‘There’s a real confidence in the London real estate market. Investors seem frantic to buy. The liberalisation of the RMB has helped immensely and has, in part, been responsible for broadening the profile of buyers,’ said Lucy Morton, senior partner and head of lettings at W.A Ellis who has recently returned from a trip to Hong Kong.
‘Twenty years ago buying property in London was confined to the super rich. Today there are high net worth individuals, in large numbers, looking to invest in the capital,’ she added.
She pointed out that exhibitions are a popular way to buy. People queue to get into an exhibition, having researched the area in which they want to buy, the schemes and often the developer they’ll be buying from. They’ll have their deposits ready and invariably leave having made a purchase.
‘South East Asian investors have traditionally bought in new developments in the core areas of prime central London, typically a one or two bedroom apartment in a new build scheme. Many buy just one apartment, but some high net worth families can, and often do, spend millions,’ explained Morton.
‘At the moment, buyers are increasingly investing south of the river where developments stretching from Vauxhall to Battersea are being snapped up. There is so much supply coming to the market here that I would caution buyers to take this into account when they purchase,’ she said.
She also pointed out that recent years have seen the growth of property portals, including Juwai.com and Chinese language search engines, such as Baidu. ‘It is definitely the way the market is moving and they will undoubtedly play a greater role in the future,’ she added.
She also explained why education is a key prompt to residential investment. ‘Children are attending our private schools in ever larger numbers and Mandarin now forms part of the curriculum in many of the schools. At university age, more students arrive and for many families accommodation in the private rented sector is sought. We have seen a steady growth in the number of South East Asian students looking for good, centrally located properties to rent,’ she said.