Economy

Chinese buying up investment properties in London

By Hu Yuanyuan (China Daily)
Updated: 2010-07-22 09:59

BEIJING - Chinese investors spent approximately 170 million pounds ($260 million) buying up newly built properties in central London in the 12 month period ending March 2010, driven by a weaker pound and tightened real estate policies at home, major international real estate service providers said.

According to Liam Bailey, head of residential research with real estate agency Knight Frank LLP, Asian investors are now buying more than a fifth of all central London's new properties, and account for 49 percent of all investment purchases in central London.

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"Of the 7,595 newly built properties completed in the 12 months prior to March 2010, 41 percent of these were bought by investors rather than owner occupiers. And 49 percent of all investors were Asian, with 11 percent from the mainland and Hong Kong, 10 percent from Singapore and 7 percent from Malaysia," said Bailey.

"We estimate that over the last 12 months, Asian investment volume has totaled 761 million pounds," he added.

Data from real estate service provider Savills showed buyers from southeast Asia - and those from the mainland and Hong Kong in particular - account for 35 percent of new development sales in London, making the Chinese the most active overseas buyers in the city.

"Recent tightening of (the government's real estate) policy towards Chinese domestic property investments has led to an increased appetite for overseas real estate purchases. And the strengthening of the yuan against major currencies in the past two years has also meant Chinese buyers could acquire foreign real estate assets at a bargain," said Randall Hall, CEO of Savills China.

With Chinese investors getting more nervous about keeping money at home after outstanding credit rose by 30 percent and property prices skyrocketed last year, the launch of tightening real estate polices since the end of last year also made property investments more risky.

"Besides, we cannot underestimate the role of UK education in encouraging inward investment into London," said Bailey.

Over the past decade, the number of Asian students studying in UK universities has risen by 175 percent. The strongest growth comes from Chinese, Indian and Pakistani nationals. The number of Chinese studying in the UK rose from 4,017 in 1998-1999 to 47,035 in 2008-2009, industry sources show.

In many cases, Asian investors snap up residential properties in the UK for their college-bound offspring to reside in for the duration of their education there, "and then retain the property as an investment," Bailey added.

According to Knight Frank's research, for Asian investors location is a key priority - preferably close to a subway station. Meanwhile, Knight Frank's experience in the past year has shown a change in buying power with Asian investors selecting more up-market properties.

"In 2007, exhibitions in Asia were focused on smaller, more affordable units but now demand is for more spacious one and two bedroom apartments priced from 400,000 to 800,000 pounds, if not more," said Sebastian Warner of Knight Frank's residential investment team.