Chi­nese in­vestors pile into Lon­don prop­erty mar­ket

China Daily (Hong Kong) - - BUSINESS - By CECILY LIU in Lon­don cecily.liu@mail. chi­nadai­

Lon­don’s com­mer­cial prop­erty sec­tor wit­nessed a sharp surge in Chi­nese in­vest­ment in 2016, driven by the weaker pound re­sult­ing from un­cer­tain­ties over Brexit.

Chi­nese in­vestors bought more than 3.15 bil­lion pounds ($3.9 bil­lion) worth of cen­tral Lon­don com­mer­cial as­sets in 2016, ac­count­ing for 22.5 per­cent of to­tal cen­tral Lon­don trans­ac­tion vol­umes, com­pared with their pur­chase of less than 1 per­cent in 2006, lat­est statis­tics by prop­erty bro­ker JLL showed.

Com­mer­cial prop­erty, mostly of­fice build­ings, can gen­er­ate more than 4 per­cent net re­turns for in­vestors, ac­cord­ing to es­ti­mates by Eric Zhao, an as­so­ciate di­rec­tor and Chi­nese cap­i­tal mar­kets spe­cial­ist at es­tate agent Sav­ills. bil­lion

Lau­rel Zhang, head of the China and Far East desk at the law firm Sher­rards So­lic­i­tors, said her team has also noted a very strong Chi­nese ap­petite for UK prop­erty in 2016 from first­hand ex­pe­ri­ence, which has con­tin­ued very strongly into 2017.

Al­though Brexit un­cer­tain­ties have led to some slight drops in prop­erty val­ues, Chi­nese in­vestors are still get­ting a bar­gain due to the de­pre­ci­a­tion of the pound, said Zhang.

The pound has de­pre­ci­ated more than 10 per­cent against the yuan since the Brexit ref­er­en­dum in June.

Eric Pang, di­rec­tor and head of the China desk at JLL, said the trend of Chi­nese in­vestors buy­ing over­seas com­mer­cial prop­erty started in around 2011, led by sov­er­eign wealth funds, in­surance firms and in­sti­tu­tional in­vestors.

Pang said: “Th­ese in­vestors are keen to di­ver­sify their as­set base, and good as­set ac­cu­mu­la­tion they were ex­pe­ri­enc­ing in ear­lier years gave them fur­ther ca­pa­bil­ity to in­vest over­seas.”

In more re­cent years, pri­vate sec­tor funds and in­vestors and also prop­erty in­vest­ment firms have fol­lowed to make in­vest­ments too, Pang said.

Deals have con­tin­ued into 2017. CC Land Hold­ings, a prop­erty-hold­ing firm backed by Hong Kong prop­erty ty­coon Che­ung Chung-kiu, bought an of­fice build­ing in Padding­ton for 292 mil­lion pounds in Jan­uary.

value of com­mer­cial prop­er­ties bought in Lon­don by Chi­nese in­vestors in 2016

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