Super wealthy Chinese buyers are set to become the biggest investors of prime London property as they look to bring their money into the UK, revealed Harrods Estates, the property arm of the world famous Harrods department store.
According to the luxury agent, wealth generated by China’s surging economy has flowed into Hong Kong and Singapore through corporate investment, fueling the demand for London property, but mainland China remains untapped due to an initial focus on the domestic property markets.
But this is changing as more UK developers and estate agents reach out to Chinese investors. For instance, Harrods Estates just completed trips to Hong Kong and Beijing to target high-net-worth individuals (HNWIs) looking to invest in London.
Recently, the firm sponsored a private dinner for 80 high profile guests at a five star hotel in Beijing. It also hosted a series of investment talks for another 50 guests at the Harrods store in London earlier this month.
One of the primary motivators for Chinese property investment in London is education as more Chinese parents choose British education for their children. The city’s vibrant culture, and retail and lifestyle offerings are also contributing to increased investment.
While new build properties continue to be a popular investment choice, the estate agent is also seeing increased interest in period homes with brand new refurbished interiors.
Commenting, Simon Barry, Head of New Residential Developments at Harrods Estates said: “There is a huge amount of wealth in China and although we have started to see investment in London property in the last five years, the focus has been on off-plan new build developments ranging from £500,000 to £5 million. This is just the beginning of a vast amount of wealth from China and we expect this will increase dramatically over the coming years, when Chinese billionaires will look to spend anything from £5 million to £50 million.”
He added: “We expect to see more high level Chinese executives finding time to travel to London and other international centres, seeking out new markets and new opportunities outside of China. At present there are capital controls in place restricting potential Chinese purchasers taking out US$50,000 per year, however a revised version of the Qualified Domestic Individual Investor programme (QQII 2) has recently been announced – though is yet implemented. The programme will be open initially to anyone working in six major cities with assets in excess of circa US$160,000, and will allow them to export up to 50 percent by value of their net worth. For corporate investment the capital limit would rise significantly to US$1 billion.
“In addition, China’s slowing economy and its recent stock market crash, which saw the Shanghai Composite Index lose 30 percent in value over a three week period in mid-June and a further plummet in value in late July, will actually encourage investors to look at other opportunities.”
Romesh Navaratnarajah, Singapore Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
