London property looks set to get yet another boost in the next few years – this time from Chinese investors. The Chinese government has loosened rules on offshore investment (specifically on the investment of insurance proceeds), and Savills says we could see up to £10bn of new investment in the capital as a result.
Another Savills report from last July highlighted the growing trend among Chinese buyers for London property, finding they had become the fourth largest net purchasing group in second-hand prime property in 2011/12.
Savills said: “While their focus remains on the lower tiers of the market (70% of Chinese buyers brought second hand property under £1m, compared to an average of 31% among other overseas groups), or in core Prime Central London locations in the case of Chinese buyers of super prime property, there are early signs that some ‘pioneers’ are looking to other prime London areas.” Prime south west London property was a favourite among Chinese buyers. (Read our feature on whether Battersea property is worth investing in.)
More broadly, Chinese and Asia Pacific buyers accounted for almost a third (31%) of all purchases in London’s prime new build market in 2011/12, and 5% of all purchases in the prime London resale market, according to the same research from July.
The Chinese government is pretty keen on investing in the UK too. Among the highest-profile recent investments of China’s sovereign wealth fund, the Chinese Investment Corporation, were January 2012’s 8.7% stake in Thames Water and a 10% stake in Heathrow in November 2012. These infrastructure investments followed the announcement in September 2011 that London would become a new offshore trading market for the yuan, which George Osborne hailed at the time as “an attractive investment opportunity for Chinese investors and a gateway for further investment in Europe”.
Looks like he was right.
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