China’s Capital Flow into UK Commercial Property to Exceed 2015 Levels

Posted on 2 February, 2016 by Chris Grigorovsky

With a fairly stagnant investment flow in the summer last year due to the volatility of the Chinese financial market, Chinese investors returned to London in Q4 2015 with a total of £900 million within the capital and £1.4 billion outside it. This interest looks as if it is set to continue into 2016 reports CBRE.

China’s Capital Flow into UK Commercial Property to Exceed 2015 Levels

So far this year, there are currently £740 million worth of transactions being processed, which includes Aldgate Tower, 88 Wood Street and 17 Columbus Courtyard. Completion is expected before the Chinese New Year and then post Chinese New Year will see a further £540 million of deals. This brings Q1’s totalling this year to £1.28 billion within London.

CBRE’s Head of China Business Team in London, Richard Zhang, commented on the findings: “This transaction is further evidence of the sustained appetite we are seeing from Chinese investors for prime central London office assets.

“This deal follows China Overseas’ debut London investment deal in 2009 and reflects the strategy sought by a whole range of Chinese investors to increase their current allocations to overseas real estate – with London at the top of their wish list.”

The majority of the investment has come from insurance, developers, private and institutional investors, with Chinese insurance companies expected to be the dominant source of investment capital from China to London real estate.

Mr. Zhang added that the attractiveness of sterling and prime large lot size assets are some of the reasons why London still has that welcoming safe haven to foreign investors. Currently, levels of investment activity are strong, which means that Chinese investment could exceed the £3bn total in 2015.

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