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The View | Hong Kong, Singapore investors filling void in London property left by mainland Chinese retreat
- Beijing’s imposition of capital controls, escalating trade tensions with the West and regulatory tightening has ended a years-long buying spree
- As mainland money departs, other Asian investors still value the safety, liquidity and transparency of London’s property market
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In 2017, mainland Chinese investors ploughed US$9.7 billion into British commercial property. That was slightly higher than the amount invested in Hong Kong and significantly more than in the United States, which in the preceding two years had attracted the lion’s share of Chinese outbound investment.
According to data from Knight Frank, Chinese buyers – including those based in Hong Kong – accounted for nearly 40 per cent of purchases of central London offices by overseas investors.
The acquisition of the Leadenhall Building, the tallest skyscraper in the City of London, by Hong Kong-listed mainland developer CC Land Holdings for £1.1 billion (US$1.4 billion) epitomised the high-profile deals struck by Chinese investors in gateway cities across the world.
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Yet, China has slid down the Asian cross-border investment league table in the past several years. Beijing’s imposition of stringent capital controls, escalating trade tensions with the West and the regulatory tightening that culminated in the current liquidity crisis in the property sector put an end to the acquisition spree.
The retreat of Chinese buyers from foreign markets is particularly evident in London, one of the top cities for global real estate investment. The de-risking and deleveraging of China’s economy – the most salient trend in Asian finance – has led to the divestment of many overseas assets, carrying echoes of the withdrawal by Japanese and Irish investors following financial crises in the early 1990s and 2008 respectively.
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New Evergrande protests amid reports troubled Chinese property giant ordered to raze development
New Evergrande protests amid reports troubled Chinese property giant ordered to raze development
Vulnerable Chinese developers have been forced to sell some of their flagship properties. In February, Shimao Group Holdings, which defaulted on a yuan-denominated loan at the start of this year, sold a prime office building in the City of London to help shore up its finances.
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