Despite the widespread uncertainty created following the Brexit vote, businesses and investors out of China, or more specifically Hong Kong, are pumping some serious money into commercial property in London. In fact, Chinese investment in the UK capital has more than trebled since the time prior to the Brexit vote.

In just the first 6 months of 2017, Chinese investors spent a total of £3.96 billion on London’s commercial properties, according to data from the CBRE real estate group. This is a substantial increase on the previous year’s spending, which totalled £2.69 billion across the entirety of 2016. According to the Frank Knight agency, 92% of this spending came out of Hong Kong, reportedly due to increased political uncertainty in the area.

Some of London’s most iconic skyscrapers have recently been snapped up by Hong Kong-based investors, such as the “Cheesegrater” and the “Walkie Talkie”, the latter of which is being sold to food conglomerate Lee Kum Kee this very month for a staggering £1.28 billion, setting a new record in the process for the most expensive office building in Britain.

We won’t delve too much into politics here, but suffice it to say that Hong Kong businesses are reportedly growing somewhat wary of the Chinese government’s actions and motives of late, and are seeking to diversify from their home market as a result. This is likely the driving force behind much of the London investment.

In the words of Chris Brett, head of international markets at CBRE, “If you’re concerned that China is taking control of Hong Kong more and more and you need to take capital out of that jurisdiction, London is attractive.”

James Beckham, head of central London investment at property consultant Cushman & Wakefield, seems to share this opinion, as he told Reuters, “Cheaper money, the rule of law, cultural familiarity and a need to diversify out of a home market is what’s driving Hong Kong demand in the UK.”

As Mr Beckham touched upon in his aforementioned statement, the 12% drop in the value of British sterling as compared to the US dollar, to which the Hong Kong dollar is pegged, is further driving demand for commercial property in London as investors seek to capitalise on the overall cheaper market.

Given all the worry that quickly sprang up following the UK’s decision to leave the European Union, it is reassuring to see that foreign investors still have a certain amount of faith in our markets. We can only wait and see if this trend continues, but it shows no sign of slowing down as yet.

Sam Bonson

Sam is an aspiring novelist with a passion for fantasy and crime thrillers. He is currently working as a content writer, journalist & editor as he continues to expand his horizons.
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