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Economy

Chinese property investors lured to UK by weaker pound(2)

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2016-10-01 10:56chinadaily.com.cn Editor: Li Yan ECNS App Download

This demand fueled a rapid growth of Chinese-speaking property agents, real estate lawyers and other supporting service-providers in the UK, which in turn made investing much more convenient and attractive for Chinese investors.

Statistics from agents Jones Lang LaSalle show that Chinese investors were the second-largest investor group in UK commercial property between the start of 2014 and the first quarter of 2016, with a total transaction value of $5.8 billion, just behind the United States.

The London-based think-tank, the Centre for Economics and Business Research, estimates Chinese investment in the UK property market will grow to 30.2 billion pounds ($40 billion; 36 billion euros) by 2025.

Post-Brexit investment enthusiam

Chinese property developers and investors are investing into the UK's regional cities at unprecedented rates following the UK's vote in June to leave the European Union.

In July Sichuan Guodong Construction Co announced more than 1 billion pounds investment in Sheffield for property development, and Country Garden announced up to 2 billion pounds ($2.65 billion) of investment in Birmingham in September.

Both deals broke the record for the largest Chinese investment in the UK outside of London at the time of announcement, highlighting both the slightly faster growth of UK regional property markets in the wake of the June 24 referendum vote and regional cities' governments' increasing efforts to attract foreign investment and demonstrate they are open for business.

It also fits into a longer term trend of Chinese companies becoming more mature, familiar and ready to embark on property investment opportunities outside the UK's biggest and most obvious city, London, as they often visit the UK's regional cities on holiday or go to see their children who study in these cities.

In addition, the less density of regional cities' property markets also translate into more need for new builds, which are opportunities Chinese property developers are keen to seize, and then use their networks in China to sell these new units, often off-plan, to Chinese buyers.

For example, China's Beijing Construction Engineering Group is currently investing into and participating in the construction process of two key projects in Manchester. The first, known as Middlewood Locks, is the design and construction of a mixed development including a 2000-unit apartment, hotel and retail complex, and the second is the design and construction of two tower blocks for a mixture of 5-star international hotel, "Grade A" office, luxury residential apartments and retail use, known as St. Michael's.

Different from London property market, where competition is far more fierce, the UK's regional cities which need new property development often make more of an effort to reach out to Chinese investors, and attract them with relationship building and a friendly attitude.

For example, the Sheffield deal was inked when a Sheffield City Council delegation visited Sichuan Guodong Construction Group.

"We have gone out and made this happen, not sat back and waited for others to come to us. It demonstrates our ambition for the city," said Leigh Bramall, deputy leader of Sheffield City Council.

Such a proactive attitude is undoubtedly affected by post-referendum uncertainties. "At a time of unprecedented uncertainty and turmoil on the national political scene, we have taken the bull by the horns," said Bramall.

Encouragingly, statistics show stronger property price growth post referendum in cities such as Manchester and Birmingham, at a time when the growth in London property market prices have slowed, said Michael Ball, a professor of urban and property economics at Henley Business School, University of Reading.

"This is because previous to the vote, London property prices grew much more, so now this is slowing. Regional economic growth is impacting on property prices' growth," Ball said.

  

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