This year we expect Chinese investment into UK commercial real estate to exceed 2015 levels as the market remains buoyed by the Chinese Presidents state visit in October 2015, Britain’s status as an investment safe haven and, in particular, London’s continued attractiveness.
In the year to date (1 January–29 February 2016), £560.3 million of Chinese deals were transacted in the London market, putting volumes on track to exceed 2015’s total annual turnover of £1.2 billion.
Chinese investors continue to be driven to invest internationally by their Government’s various capital liberalisation initiatives and long-term national strategy to invest globally in order to ensure its financial stability. London is a top destination for capital due to the diversity of opportunities available, swift transaction times, and liquidity of the market. And although there is a significant amount of capital chasing London real estate, with a finite level of supply, there are still a number of assets available which offer an attractive yield profile. Long-term income streams, redevelopment opportunities and mixed-used schemes entering the market provide a variety of return profiles, which in turn attract an array of investors.
In addition, the profile of the investors we’re seeing enter the market includes Chinese developers who are seeking higher returning development opportunities, targeting mixed-use and residential led schemes, rather than core assets within London.
Key investments in 2016 thus far include Chinese state-owned real estate investor, Poly Real Estate, completing its first purchase in London in January with the £145 million acquisition of Ludgate West, 5 Fleet Place and China Overseas Land and Investment’s purchase of the Helicon Building, South Place, from Deutsche AWM for £145 million in February.