Chinese investment in London 'booming'

Chinese investment in the London commercial real estate market has more than trebled since before the UK voted to leave the European Union, with most interest coming from politically uncertain Hong Kong.

According to figures, while many investment markets are pulling away from British property as a result of last year's Brexit referendum, Chinese investors largely from Hong Kong are showing an increased interest in investing in many of London's best known skyscrapers.

In fact, data released by the CBRE real estate group revealed that Chinese investors spent £3.96 billion on commercial property in London in the first six months of 2017, the highest amount spent by the region's investors on record.

Hong Kong's real estate experts accounted for 92 per cent of this spend, according the Knight Frank agency said, helped by firm Lee Kum Kee's decision to pay the record sum of £1.28 billion for 20 Fenchurch Street, also known as the Walkie Talkie, in August.

One of the main reasons Hong Kong has become a property investment hub is the recent crackdown by Beijing on foreign investment being made by mainland companies, with China's state planner announcing strengthened rules for firms making "irrational" overseas investment.

Commenting on the move by the Chinese government, Anthony Duggan, head of capital markets research at Knight Frank, said: "Deals from mainland China already make up a smaller proportion of the activity from the region, with Hong Kong investors most active.

He added: "We expect that Chinese investors will still look to make strategic real estate purchases that fit within their business plans."

The figures released by Knight Frank suggest that one of the main reasons that London has become a specific target for Hong Kong investors is the 12 per cent fall in the sterling following the Brexit referendum. Higher rental yields have also had an impact, with Hong Kong's equivalent properties reaching record prices back home.

Aside from 20 Fenchurch Street, also known as "the Cheesegrater", other London landmarks attracting real estate interest include 30 St Mary Axe, or "the Gherkin", and Heron Tower, both of which have well-known business tenants and are in high demand.

This year alone, investment from China and Hong Kong has accounted for a third of all investment in the Capital's commercial real estate, up from under 10 per cent ahead of the referendum.

The price of London's buildings per square foot is thought to be one of the main factors drawing interest into the City of London over other global rivals, with values working out cheaper in the UK's capital than in Tokyo, New York and San Francisco.

Couple this with higher rental yields than most of the globe's leading investment hotspots and London could soon be considered one of the best regions for investment both within China and beyond.

Previous post

Asian investors spending £4bn on London real estate

Next post

Private equity investment booms in Europe