Over the last fifteen years, it has been ‘common’ knowledge that the levels of Foreign Direct Investment into the United Kingdom from China has increased significantly and investment in property has been no different. This has spread across both residential and commercial leading to record transaction values and in some instances; record levels of transactions volume.
The best example of such has been the capital. The widely discussed acquisition of the Cheesegrater was from a Hong-Kong based consortium –CC Land – which saw the acquisition hit a record level of £1.15 billion. The yield was also one of the lowest in commercial property history, with a figure of under 4%. Whilst this was the transaction that gained the most publicity, it was only one of the many acquisitions that combined, totalled nearly £4billion of Chinese investment into the London commercial property market in the first six months of 2017.
Looking further North, Chinese enquiries into Manchester property jumped by more than 50% in 2016. It is thought that one of the largest contributing factors was the introduction of the direct flight from Manchester to Beijing. The Manchester-China Forum – a group that encourages commercial links between the two locations – estimated that there was £2.1billion worth of development projects in Manchester from Chinese investment in 2016 alone.
Reasons for the increase in investment have been discussed by an array of different analysts which has naturally resulted in a host of potential answers. However, the defining factor seems to be the decrease in the value of the Pound Sterling in comparison to the value of the Chinese Yen. A further reason has been labelled towards the ‘downturn’ of the Chinese domestic market. The continuous investments over the last ten years have caused prices to rise and no longer provide the attractive opportunities they once did. This has encouraged them to turn to the UK for the opportunity of ‘value add’ investments.
Will the investment continue in 2018?