Chinese developers tipped to invest in luxury London market

Falling pound and capital's growth prospects make market ripe, says head of luxury developer

PUBLISHED : Wednesday, 07 August, 2013, 12:00am
UPDATED : Wednesday, 07 August, 2013, 3:47am

More property developers from China are expected to enter London's luxury residential market over the next 12 months, lured by the city's bright growth potential.

Hong Kong developers might join the bandwagon, especially because the pound had already fallen 35 per cent against the Hong Kong dollar, said Mark Griffiths, managing director of luxury residential developer St George.

"They've got money and I don't think they'll pass up the opportunity to cash in on a growth market, especially London," he said. "I'm sure they'll make their money work."

Dalian Wanda Group's development project in London was likely to spark a spate of new developments in the city by Chinese developers, he said.

In June, the conglomerate said it was buying privately held British yacht-maker Sunseeker for £320 million (HK$3.8 billion) and would invest £700 million to build a 160-room luxury hotel and apartment complex overlooking London's River Thames.

Griffiths said a 45.3 per cent shortfall in London's residential sector, strong rental demand, a liquid and transparent property market and a host of other factors made the city attractive to overseas developers and investors.

"Capital values in London are growing by an average of 4 per cent a year. This means that investors in our project, for instance, can make a very substantial gain of about 20 per cent by the time it is completed in 2017," he said.

St George is launching an Asian roadshow for its 52-storey luxury residential project One Blackfriars on the south bank of Thames with an offer of an initial batch of units in Hong Kong next month.

"We expect to generate up to 35 per cent of our sales from Southeast Asia, including Hong Kong and Singapore," Griffiths said. While declining to provide any estimate on sales from China, he said they were likely to be significant.

"Investors are likely to go for the lower floors of One Blackfriars for rental purposes in light of London's strong rental demand. I expect units in the upper floors to attract mostly end-users with children with plans to study here and those would like to own a unit in a landmark project in a central location in London.

"We expect the penthouse unit, which we're offering for £100 million, to be a toss-up between investors from China and Russia. It will certainly be a rare prestige for the owner of our penthouse to have a unit that will provide a panoramic view of London."

Griffiths said the increase in property stamp duties in Hong Kong could encourage scores of investors in the city to look elsewhere, notably London, for alternative investments.

One Blackfriars will provide 274 luxurious studio units for £900,000 each, one-bedroom apartments for £1 million , two-bedroom units for £1.8 million and three- and four-bedroom apartments for more than £3 million. The complex will also provide high-quality shops and restaurants, a boutique-style hotel and a landscaped piazza.

The project is close to transport connections, prime shopping districts, and educational institutions.