London is still the biggest draw – but where else in the UK are rich Chinese investors buying property?

As international travel and investment is on hold until the Covid-19 crisis passes, property companies are looking for what is going to happen when markets, hopefully, bounce back.

Wealthy Chinese have long been reliable investors in the market, and looked to the UK, specifically London, as a stable and reliable point for investment.

London was the top destination for Asian outbound capital in 2018, according to last year’s report from commercial real estate services firm CBRE.

In 2018, 18 per cent of total outbound investment targeted London, which was an increase from 13 per cent in 2017.

Investors from China, Singapore and South Korea accounted for more than 85 per cent of total investment.

As the politics and sentiment of 2019 took a heavy toll on China-US investment, Chinese investors sold billions in US commercial property in the last 12 months.

Yet a trend for growth was seen in the UK. Harrods Estates saw investment from Chinese buyers rise from 2.5 per cent in 2016 to 20 per cent in 2019, and that was from Chinese who are just 1.5 per cent of the UK population.

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Luca Garrett, regional sales director, Ballymore, says: “The UK, in particular London, remains a key global target for Chinese buyers, who are increasingly taking a long-term view to investment based on the strong fundamentals of the UK economy, clarity of the judicial system and world-class educational institutions. As such, these buyers are less sensitive to short-term economic and political uncertainty, which in turn provides opportunity to secure best-in-class real estate in areas with strong growth potential.”

The trend of buyers from China, including Hong Kong, is on the rise. Mark Elliott, International Residential Department Head at Savills Hong Kong said: “The UK is by far the most popular destination when it comes to investing in residential real estate globally, with 92 per cent of Savills Hong Kong buyers purchasing there.”

“The other 8 per cent of buyers are doing so in the US, Canada, Australia, Vietnam and Thailand, and the numbers simply aren’t comparable. While the weak pound throughout 2019 and the historical stability may be factors, we’ve found that this is more as a result of the legacy connection between the two nations, not to mention the education system being one of the best in the world. Hong Kong buyers feel comfortable and have been investing in London in particular for many years.”

What about Hong Kong itself, where mainland Chinese buyers have previously made up a large proportion?

Recently, the buying rate has slowed, with CBRE data showing that Chinese buyers account for 11 per cent in 2019 compared to 20 per cent in 2018.

Reeves Yan, executive director, Capital Markets, CBRE Hong Kong explained that “their property buying rate is slower compared to buying in other countries due to the current market uncertainty in HK.

Yet because Chinese buyers like luxury houses or sizeable apartments at The Peak and south Hong Kong Island such as Repulse Bay, Deep Water Bay, Shouson Hill and Stanley, the key drivers of their purchase decision would be owner-occupation with a buy and hold approach.

Also, Hong Kong has strong legal and accounting systems with low interest rates and a stable currency pegged to the US dollar, which all makes the city an attractive real estate investment market for mainland Chinese groups.”

It seems that these wealthy mainland buyers are preferring to look further afield, to the UK.

Regal London is a privately held value-added real estate company focusing on residential-led mixed-use developments in the London market since 1998.

“Chinese buyers still prefer new build property. Lateral apartments, either one or two bedrooms in size, tend to be the most sought after among our customers,” said Paul Eden, CEO of Regal London.

“This is largely led by a need for a low-maintenance, modern home. Our customers are looking for something that is well constructed and beautifully designed. We work with carefully selected leading architects, such as Squire and Partners, to create thoughtful, well-proportioned, high specification apartments which are ideal for owner/occupiers or as a rental investment.”

With London the biggest draw, do they buy anywhere else? Mark Elliott, International Residential Department head at Savills Hong Kong said: “Birmingham and Manchester are becoming increasingly more popular as London values continues to grow. Hong Kong people aspire to purchase property, and when it comes to investing overseas, they will look to countries and developers that they trust but will sometimes look outside of the capital city for better value.”

Luca Garrett, regional sales director, Ballymore sees a similar trend of looking to less traditional hotspots.

“Within London, Chinese buyers are also now looking outside of traditional ‘golden postcodes’ and focusing on areas undergoing regeneration,” he said. “One such area is Brentford, in west London, where we are revitalising the high street – a significant eight-year masterplan which will ultimately deliver a new town centre alongside new homes, public space, and retail and commercial offerings.”

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