Wealthy investors from China could flood the UK property market with billions in the next 10 years, further pushing up house prices, according to a new report from the Guardian.
The role of investment from wealthy families and funds from Middle Eastern states like Qatar and the UAE is already well known.
So much money is now being invested in parts of the capital that an unofficial “Qatari Quarter” has popped up in the Mayfair district of the city. However, Chinese investment has largely flown under the radar so far.
“Our thesis — and this is supported by quite a lot of evidence — is that in many ways the international Chinese investment journey is probably just starting … The exciting thing about China is that there are 168 cities with more than a million people. So this is just such a huge market,” Charles Pittar, the chief executive of China-focused property site Juwai told the Guardian on Friday. “The UK market, particularly post-Brexit, is really picking up [for Chinese investors],” he added.
As China continues to grow, and its middle class expands, people are going to look to the West as a place to invest, with the UK remaining an attractive destination. Some estimates suggest that Chinese citizens could invest as much as $200 billion in overseas property over the next decade. It is unclear exactly how much of that the UK will see, but it is likely to be a sizeable chunk.
As estate agency and property consultancy firm Knight Frank noted in its most recent Global Cities report: “The fourth wave of outbound investment is now underway, with wealthy individuals and small to mid-cap state-owned enterprises seeking exposure to global real estate markets.”
Knight Frank cites the lifting of several caps on individual and corporate spending on overseas property as a driver for this increased desire to spend on property in places like the UK.
Investment from China in UK property is already pretty widespread, with a huge investment from Chinese construction firm Sichuan Guodong Construction Group — worth £1 billion over 60 years — into several major projects in the city of Sheffield. Housing developments in commuter towns for London like Slough are also being heavily targeted at Chinese investors.
While foreign investment into the UK property market is an important source of revenue for the country, fears are rife that it could help to inflate a housing bubble, and make it even more difficult for Brits to find affordable housing and get on the property ladder than it currently is.
For instance, an investigation by the Guardian earlier this year showed that vast portions of the tallest residential tower in London are unoccupied for the majority of the year because their wealthy owners live elsewhere. Apartments in the Tower at St. George’s Wharf in Vauxhall are largely owned by overseas investors, with 130 of the 214 sold since the building’s completion being bought by foreign owners.
As a result, London mayor Sadiq Khan has announced a formal inquiry into the role foreign investment plays in London’s property market, saying: “It’s clear we need to better understand the different roles that overseas money plays in London’s housing market, the scale of what’s going on, and what action we can take to support development and help Londoners find a home.”