The landmark sale of London’s Leadenhall Building – dubbed the Cheesegrater – pushed Chinese investment levels in the UK capital to an all-time high in the opening months of 2017.
Hong Kong based developer CC Land’s £1.15 billion acquisition took total Chinese investment volumes in the city in Q1 to an unprecedented high of £2.3 billion. This placed total volumes from China at 69 percent of all deals, up from 25 percent in 2016.
These new figures highlight London’s ongoing allure as a safe haven for Chinese investors, who are now second only to U.S. investors as the world’s biggest exporter of capital.
It’s a significant step, says Alistair Meadows, Head of JLL’s UK Capital Markets: “These investors only recently emerged as a dominant source of capital within the London office market,” he said. “In the wider economic climate, Chinese investors are looking for real estate opportunities that combine both value and relative stability and, as an epicentre for real estate investment, London continues to tick those boxes.”
While Chinese capital continues to lead the charge in a wider push into London, investors from other Asia Pacific markets, including Taiwan, Singapore and Malaysia, are also active in the city.
The depreciation of the pound has undoubtedly spurred some investors, according to JLL’s Head of London Capital Markets, Julian Sandbach, but the long term driver – the desire to diversify in safe haven markets – remains. “This pressure has become more urgent over the past 12 months as the Chinese government has made noises suggesting that it may impose restrictions on certain types of real estate investment,” he explains
And as the hunger for London property grows, so do the size of the assets. While activity in 2016 was largely driven by small to medium size office sales, the Leadenhall building, along with CC Land’s recent purchase of 1 Kingdom Street in Paddington for £292 million, are good examples of these investors setting their sights on larger scale assets.
Click here to find out more about cross-border investment into the United Kingdom in Q1 2017
Head of UK Capital Markets, JLL