Overseas investment in UK property has been considerable over the last few years with China and the Middle East leading foray.
Although overseas investment is still flowing into the United Kingdom irregardless of the Brexit factor we have seen Chinese investors pull 84% of their overseas property investments globally in the first half of 2017.
Brexit may or may not be a factor some Chinese investors have reduced their exposure in the global property market, but the main reason is the Chinese government has excerted pressure of investors on a “negative list” of foreign investments that were attracting Chinese cash, according to Morgan Stanley.
During 2016 Chinese investment accounted for 25% of commercial property bought in the central London area according to data from Morgan Stanley’s research team.
2017 did see record breaking prices paid for UK property such as the “Cheesegrater” building by Chinese investment companies.
The unexpected curtailing of investment by Chinese investors into UK property could in some small way explain a recent softening in the London property market. As we have seen some residential property prices in London began falling in the last few months.
The Royal Institute of Chartered Surveyors currently describes the London property market as “stagnant.”
“Over half the investment in the City over the past year has come from Asian investors,” Morgan Stanley said, and only 15% comes from the UK. (“The City” refers only to London’s financial district.)
In total, Chinese investment in foreign property globally was estimated at $10.6 billion in 2016.
Morgan Stanley said it has dropped to $1.7 billion this year, a decline of 84%.
In recent weeks we have seen the China Banking Regulatory Commission began severely limiting funding for overseas property investments.
Only time will tell if this trend continues with both the government and Chinese investors.
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