China has a huge population and so, it provides the UK with an opportunity when it comes to targeting the country for property investment.
Individuals with a high net worth have been purchasing property in London for a number of years. The property is usually bought off plan and then either rented, held as investments or used as second homes.
After the UK decided to leave the EU, there was an element of uncertainty around the UK when it came to investment which led to many investors holding back in an attempt to see what would happen. As the value of the pound dropped, Asian buyers took the opportunity to begin enquiring about property once again.
Buyers from China usually have four reasons why they invest: they use London as a safe place to keep their money, they protect themselves from the weakening of the Chinese yuan. Owning a property is an indicator of their wealth and what they have achieved while others purchase property as a second home or for education purposes where their child will study in the UK.
There has been a shift from the centre of London to the outskirts in recent years as investors look to take advantage of cheaper property and better transport links thanks to Crossrail, linking the west side of London to the east side.
It has only been 8 months since the Brexit announcement was made. However, in reality it is going to be two years until the real changes are seen and solid plans are put in place. There is still a demand for new property in the UK as Chinese investors as the British Pound is becoming cheaper, particularly for Hong Kong Dollar investors.
The price of property in London is on the rise but Chinese buyers are still grabbing bargains. This can be seen when the price of property in London in 2007 is compared to the price of property in January 2017. The average price of property in November 2007 was around £297,000 where the exchange rate of 16 Hong Kong Dollars to the pound equating to HKD4.9 million. In contrast to this, in January 2017, the average price is £475,000 which is a rise of 60%. Yet, as a result of the exchange rate which is around HKD9.4 to the pound, the same property would set a buyer back HKD4.5m.
Regardless of rising prices, property investments in London are 8% cheaper in Hong Kong Dollars than it was in 2007 and this means that investment is going to continue during 2017 and into the future as Chinese buyers take advantage of low prices.
The UK property market is still strong despite the uncertainty that came with Brexit while foreign investors still believe it to be a safe place to invest. While Chinese investors continue to look for investment opportunities to invest outside of China, it is likely that the UK will still benefit and so, it is expected that investment will continue to arrive from China.
