Despite the ongoing coronavirus-led global uncertainty, the United Kingdom still remains the number one property investment attraction for Chinese buyers. 

As international travel and investment is suspended due to the Covid-19 crisis, property businesses are looking towards what will happen after this is all over – when markets hopefully recover. 

The rich Chinese have long been interested in the UK property market, with particular interest towards London as a lucrative and reliable investment location. 

In 2018, London was registered as the number one destination for Asian outbound capital, according to a report published last year by commercial real estate services firm CBRE.

London received 18% of total outbound investment in 2018, climbing from the 13% recorded the previous year. 

Investors from China, Singapore and South Korea made up for over 85% of total investment. 

As the political atmosphere of 2019 weighed heavily on U.S.-China investment, Chinese opted to sell billions in U.S. commercial property over the past 12 months, turning towards the UK instead. 

Harrods Estates noted that investment from Chinese buyers rose from 2.5% in 2016, to 20% in 2019 – and this was only from Chinese who make up just 1.5% of the population in Britain. 

Luca Garrett, regional sales director at Ballymore, says: “The UK, in particular London, remains a key global target for Chinese buyers, who are increasingly taking a long-term view to investment based on the strong fundamentals of the UK economy, clarity of the judicial system and world-class educational institutions. As such, these buyers are less sensitive to short-term economic and political uncertainty, which in turn provides opportunity to secure best-in-class real estate in areas with strong growth potential.”

The trend of investors from China, including Hong Kong, is significantly increasing. International Residential Department Head at Savills Hong Kong, Mark Elliot said: “The UK is by far the most popular destination when it comes to investing in residential real estate globally, with 92 per cent of Savills Hong Kong buyers purchasing there.”

“The other 8 per cent of buyers are doing so in the US, Canada, Australia, Vietnam and Thailand, and the numbers simply aren’t comparable. While the weak pound throughout 2019 and the historical stability may be factors, we’ve found that this is more as a result of the legacy connection between the two nations, not to mention the education system being one of the best in the world. Hong Kong buyers feel comfortable and have been investing in London in particular for many years.”

Up until recently, Chinese buyers made up a large proportion of property purchases in Hong Kong – but even this is now changing. CBRE data reveals that Chinese investors accounted for 11% of purchases in 2019, compared to 20% the previous year. 

Executive director at Capital Markets, CBRE Hong Kong Reeves Yan confirmed that: “Their property buying rate is slower compared to buying in other countries due to the current market uncertainty in HK.

“Yet because Chinese buyers like luxury houses or sizeable apartments at The Peak and south Hong Kong Island such as Repulse Bay, Deep Water Bay, Shouson Hill and Stanley, the key drivers of their purchase decision would be owner-occupation with a buy and hold approach.

“Also, Hong Kong has strong legal and accounting systems with low interest rates and a stable currency pegged to the US dollar, which all makes the city an attractive real estate investment market for mainland Chinese groups.”

Wealthy investors from mainland China are seeking lucrative property investments in the United Kingdom, rather than Hong Kong. 

“Chinese buyers still prefer new build property. Lateral apartments, either one or two bedrooms in size, tend to be the most sought after among our customers,” said Paul Eden, CEO of Regal London.

Regal London is a privately held value-added real estate company focusing on residential-led mixed-use developments in the London market since 1998.

“This is largely led by a need for a low-maintenance, modern home. Our customers are looking for something that is well constructed and beautifully designed. We work with carefully selected leading architects, such as Squire and Partners, to create thoughtful, well-proportioned, high specification apartments which are ideal for owner/occupiers or as a rental investment,” Eden added.