Chi­nese buy­ers take fancy to London

China Daily (Canada) - - SHANGHAI - By WU YIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

In London, New York, Paris, Los An­ge­les, Tokyo or Lis­bon, Por­tu­gal, Chi­nese-speak­ing agents are among the most sought-after tal­ents in the realty mar­ket.

“Although the say­ing that the Chi­nese are buy­ing the en­tire [city of] London is not true, Chi­nese pri­vate buy­ers are chang­ing the form of what has been build­ing,” said Yolande Barnes, di­rec­tor with Sav­ills World Re­search.

About 10 per­cent of home buy­ers in London in 2014 come from China, com­pared with 2 per­cent in 2011, ac­cord­ing to the lat­est data form JLL, a prop­erty ser­vices provider.

JLL’s data said that Chi­nese buy­ers bought some 1,900 new homes in London in 2013, about 6 per­cent of the city’s new of­fer­ings in the year.

In­di­vid­ual in­vestors from China in the global realty mar­ket have been play­ing in­creas­ingly sig­nif­i­cant roles in shap­ing the de­vel­op­ment of ci­ties.

The world of real es­tate money has changed, and more money from pri­vate buy­ers and Asians are flow­ing into the global realty mar­ket.

Ac­cord­ing to data from Real Cap­i­tal An­a­lyt­ics, from Fe­bru­ary 2013 to Fe­bru­ary 2014, in­vestors from China have spent some $67.7 bil­lion on over­seas prop­er­ties, about 45 per­cent of the com­bined to­tal of the top five buyer coun­tries and re­gions in the world: China, United States, Ger­many, Sin­ga­pore, and the Mid­dle East.

Large amounts of wealth have flown into global ci­ties, in­clud­ing London, Paris, New York, Syd­ney and Shang­hai.

Dur­ing the past year, more than 4 bil­lion euros flowed to London from out­side the United King­dom and some 3 bil­lion euro to Paris from out­side France. New York’s prop­er­ties at­tracted com­bined in­vest­ment of some 14 bil­lion euro, among which 20 per­cent were from over­seas in­vestors.

In­vestors from Asia, es­pe­cially China, has been shap­ing the new hous­ing prod­ucts and de­vel­op­ment projects in London, said Barnes.

“Chi­nese buy­ers tend to buy new apart­ment tow­ers in premier lo­ca­tions, while Euro­pean and Bri­tish buy­ers pre­fer sec­ond-hand, ren­o­vated houses which are not nec­es­sar­ily within the very cen­tral lo­ca­tions,” Barnes said.

De­vel­op­ers have been watch­ing the trends of Chi­nese buy­ers in London and in re­sponse they are of­fer­ing more apart­ment tow­ers at premier lo­ca­tions.

In Jan­uary 2014, Chi­nese Sta­te­owned de­vel­oper Green­land Hold­ing Group an­nounced a 1.2 bil­lion­pound ($1.9 mil­lion) in­vest­ment in two over­seas de­vel­op­ment projects in London. The de­vel­oper signed a con­tract with Min­erva to pur­chase the Ram Brew­ery de­vel­op­ment site. It will also de­velop a high-end res­i­den­tial project at Ca­nary Wharf.

Dalian Wanda Group is also de­vel­op­ing One Nine Elms, a pro­posed mixed-used de­vel­op­ment com­pris­ing 1.13 mil­lion square feet of prime res­i­den­tial, com­mer­cial and re­tail space in cen­tral London.

“Chi­nese buy­ers pre­fer res­i­den­tial projects,” said Christo­pher Mur­ray, founder and man­ag­ing Di­rec­tor of W1 De­vel­op­ments, a London-based prop­erty ser­vices provider. “London as a global city has at­tracted many in­ter­na­tional stu­dents, among which a large num­ber come from China. Their par­ents may buy prop­er­ties as hous­ing to the stu­dents, and they can also gain yields from rental and growth.”

Cather­ine Chen, man­ager of the re­search team in Shang­hai with Cush­man & Wake­field, said Chi­nese pri­vate buy­ers have been fo­cus­ing on ma­ture mar­kets in North Amer­ica and Europe, but they have been ex­pand­ing their in­vest­ment des­ti­na­tions in South Amer­ica and Asia in the past few years.

Ac­cord­ing to Cush­man& Wake­field’s data, about 34 per­cent of out­bound in­vest­ment was made in Asia, 29 per­cent in North Amer­ica, and 24 per­cent in Europe be­tween Jan­uary 2008 and June 2014.

In Shang­hai alone, buy­ers spent some 3.7 bil­lion yuan ($602 mil­lion) in the global res­i­den­tial mar­ket, show­ing great pur­chas­ing power, ac­cord­ing to data from the Sav­ills Shang­hai res­i­den­tial sales team.

In­vestors are con­sid­er­ing more fac­tors that may im­pact sta­ble re­turns of prop­er­ties they pur­chase over­seas, in­clud­ing ex­change rates, taxes and rental yields, Barnes said.

“In the past, in­vestors may have fo­cuses on growth of value of the prop­er­ties; now more long-term in­vestors take rental into con­sid­er­a­tion,” said Li Huien, a 56-year-old in­vestor in Shang­hai.

Li said in­vestors who are look­ing at over­seas op­por­tu­ni­ties now have more chan­nels to un­der­stand the realty mar­ket.

“I of­ten at­tend pro­mo­tion events on week­ends in Shang­hai,” Li said. “If there are some events which may bring nice projects in other ci­ties, I will fly to those ci­ties.”

PAUL HACK­ETT / REUTERS

The de­vel­op­ment of One Hyde Park is seen in London in May. Data show that Chi­nese buy­ers bought some 1,900 new homes in London in 2013, about 6 per­cent of the city’s new of­fer­ings in the year.

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