The Rise of Chinese Investors in London
THIS is the New Hot Property Market
Hong Kong has long been on top in the luxury real estate market. Now, however, those investors are moving on and looking elsewhere.
The answer: Europe. London has been the most popular destination for Chinese real estate investors for the first half of 2014, with buyers looking for both residential and commercial properties.
Chinese clients are the dream. They are wealthy, they pay in cash, and they are looking for good values. In fact, they are replacing Russian and Middle Eastern buyers as the busiest real estate investors with the deepest pockets.
A Growing Presence
Chinese investors from China and Hong Kong are busier than ever looking for the best deals in London — most of those being luxury apartments in the fashionable Knightsbridge district and new homes near the Canary Wharf financial district.
Buyers from mainland China make up only a small portion of those high-end real estate purchases in London — accounting for just 5% of all foreign buyers of luxury London properties. However, they are a strong and fast-growing presence.
According to Forbes, London had $348 million in residential and commercial sales in the first quarter of 2014 from the Chinese market alone.
The city's good legal structure, healthy financial institutions, and the British love for owning their homes makes the property market very attractive.
The Chinese are more active in overseas real estate markets, including the U.S. and Continental Europe, but London remains highly popular for many reasons. In particular, Britain has almost no restrictions on whether foreigners can own real estate, and the country has a fairly fluid rental market, which is attractive to buyers seeking income for their properties.
Few Chinese buyers are looking for London apartments to actually live in themselves. Most are seeking investments in real estate markets they perceive as more stable than their own, and they are planning to receive steady rental income for years.
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According to Adam Challis, the head of London Residential Research, Chinese buyers will account for 12% to 13% of the market in three years compared with 8% today. And the property industry is adapting to meet this demand.
Brokers are hiring Mandarin speakers, as well as Cantonese speakers to cater to the people from Hong Kong. London developers are even omitting the number four in new buildings because it is considered unlucky in the Chinese culture.
And major deals are picking up. In June 2014, for example, China Construction Bank bought a London office tower for $187 million, and China Life Insurance picked up its own office block for $1.35 billion that same month.
In addition, China Overseas Holdings closed on its $257 million acquisition of Stephenson Harwood’s offices in London from Invesco Real Estate.
London ranks highest among the top cities for commercial real estate investment in Europe, which is one of the many reasons the Chinese choose to buy there.
Stay tuned for more luxury real estate projects and opportunities in London.
Until next time,
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