Chinese investment in UK to hit £6bn

Photo: LSBardel

China’s economy continues to show signs of weakness, sending ripples through global stock markets. New figures showed that factory activity in China had shrunk by its fastest pace in three years, causing main indexes in Europe to fall sharply. In response, the People’s Bank of China decised to cut rates and the reserve requirement ratio last week, hoping to provide a temporary reprieve.

While some might speculate that such moves would dampen Chinese appetite for property, though, experts only expect the measures to further drive investment in UK real estate.

Richard Zhang, Head of China Business EMEA at CBRE, says it is “likely to lead to more Chinese capital being deployed overseas”.

Indeed, London is the number one city for direct property investment, thanks to the recovering strength of the UK economy.

“There is a chance of some capital controls being re-introduced which would provide a short term basis obstacle,” comments Zhang. “But these are mainly aimed at private wealth so the negative effect on direct commercial property investment abroad will be minimal. Most of investments targeting London so far from china are from Chinese sovereign funds, institutional investors and large state owned enterprises; their imperative to diversity their asset base remains which will mean an ongoing need to build up their stock of overseas real estate assets.”
So far this year, CBRE has recorded £2.5 billion of property deals from mainland Chinese investors into London. The firm forecasts total transaction volumes to be well over last year’s £3 billion for the whole of the UK.

“With Chinese President Mr Xi’s October visit on the horizon, the first in 11 years, we believe British-Chinese relations will reach new heights,” continues Zhang.

“We fully expect non-property Chinese investment into the UK to hit £6bn this year, nearly double last year’s £3.5bn.”