China snaps up London skyline
CHINESE investors are ploughing billions into the London property market – snapping up trophy assets such as the ‘Cheesegrater’ and ‘Walkie Talkie’ in the Square Mile.
In a major vote of confidence in Brexit Britain, the Chinese bought £4bn of commercial buildings in the capital in the first half of 2017, according to property agent CBRE.
That was the highest amount on record and more than three times as much as they spent in the same period of last year, the six months leading up to the Brexit vote.
The slump in the pound since the EU referendum in late June 2016 has made property in the UK cheaper for foreign buyers. Sterling is down 16pc against the euro, 13pc against the dollar and the Swiss franc, and 11pc against the Japanese yen since the vote.
Investment from China – much of it via Hong Kong – has picked up particularly sharply amid political uncertainty in the former British colony.
Hong Kong’s freedoms, including judicial independence, are constitutionally enshrined under a ‘one country, two systems’ deal struck before Britain returned the territory to China in 1997.
However, concerns about those freedoms have been rising in recent years and three leaders of Hong Kong’s democracy movement were jailed last week – sparking protests by tens of thousands of demonstrators.
‘If you’re concerned that China is taking control of Hong Kong more and more and you need to take capital out of that jurisdiction, London is attractive,’ said Chris Brett, head of international capital markets at CBRE.
‘Demand for large prime assets from international investors, particularly from Hong Kong, shows no signs of slowing in the immediate future.
‘London remains a global financial city and is one of the most important real estate markets in the world, something that short term political uncertainty cannot undermine.’
Hong Kong accounted for 92pc of Chinese investment in the first half of the year, according to the Knight Frank agency.
Hong Kong food conglomerate Lee Kum Kee, best known for its oyster sauce, has agreed to pay £1.28bn for 20 Fenchurch Street – the 34-storey skyscraper known as the Walkie Talkie – a record for an office building in Britain. It follows the purchase of The Lead- enhall Building, known as the Cheesegrater, for £ 1.15bn by Hong Kong- based CC Land, which is owned by Chinese property magnate Cheung Chung-Kiu. With Beijing cracking down on foreign deals by mainland companies, investors there are instead using Hong Kong as a conduit for overseas deals.
‘Cheaper money, the rule of law, cultural familiarity and a need to diversify out of a home market is what’s driving Hong Kong demand in the UK,’ said James Beckham, head of central London investment at property consultant Cushman & Wakefield.