London property prices simply reflect the demand for purchasing buildings in the capital.
Fan Huiyong, chief editor of London-based magazine UK Property Weekly, told the Global Times, “Rich rental income and long-term stability of capital appreciation are the main attractive features of London’s commercial real estate,” adding the recent drop in value of the British pound were was a major factor in the demand from foreign investors.
Chinese investors accounted for a third of all commercial property investment in London this year, a sharp increase from less than 10 percent before the Brexit vote, according to Los Angeles-based CBRE Group, Inc., the world’s largest commercial property services firm.
Colliers International released a report this month that stated that London is still the top city in Europe for property investment, attracting three times as much investment capital of either Paris or Berlin, which rank as second and third, respectively.
This goes to show that investors are more than happy to pay London property prices for the right investment.
According to Savills, Chinese investors are investing at record levels in office space in the London borough, with as much as 5 billion pounds spent in the first half 2017.
Gwyn Richards, the head of design and assistant director of Built Environment, City of London Corporation (the largest property management firm in London), told the Global Times, “We welcome investment from around the world and certainly we welcome all the Chinese investors.”
“There are lots of interests coming from China. We realize that we need to raise our game, starting with bridging and communicating what the city has to offer to Chinese investors,” Richards added.
“There are about five major schemes being built at the moment. The cranes on the skyline tell you that. But that’s just the tip of the iceberg,” Richards said, adding that there are a lot of other schemes that have been granted planning permission, but have not yet been implemented”.
“That gives you an idea about the intensity of development activities at the moment,” he added.
According to estate agent Knight Frank, 92 percent of the Chinese investment in London’s commercial property market comes from Hong Kong.
Mark Hedley, director of ICT Sector at China-Britain Business Council, told the Global Times, “The weakening of the British pound means that access to the UK is more affordable,” adding that the fall in the pound’s value after the EU referendum outcome is driving the demand.
According to a report compiled by Real Capital Analytics, the leading global provider of capital markets data for commercial real estate, “The demand of Chinese investors for overseas commercial real estate investments will not evaporate, however, the new rules will influence capital behavior and direction.”
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