“China is so big,” marvels Victor Li, using his fingers to count all the cities he has flown to over the last 12 months to meet with cash-rich Chinese buyers interested in buying into a real-life game of London Monopoly.
Li, a director of international project marketing for the US real estate giant CBRE, is predicting a surge of eastern investment in British homes over the next decade, as increasingly affluent Chinese investors acquire a taste for international property.
“I think it is just beginning,” says Li, of the amount of money pouring into property around the world from mainland China. “You do the figures: China has a population of 1.4 billion. If you target only 1% of China’s population, that’s 14 million people – so it’s already almost two Londons.”
Sitting in his office overlooking Hong Kong’s skyscraper-dotted Victoria Harbour, Li estimates that just 3% of potential Chinese investors in overseas property have so far been found – meaning a virtually untapped goldmine lies over the border in mainland China. “China is a big market, you know?” he says. “They are getting wealthier and wealthier.”
Rich Hong Kong investors have been ploughing money into British bricks and mortar for decades, snapping up off-plan apartments at weekly property fairs that can then be rented, flipped, held as investments or used as second homes.
“I have one [London property] in Canary Wharf, one in City Island, one in Wembley Park, one in Elephant and Castle,” said one investor matter-of-factly at a recent expo in Hong Kong’s chic Mandarin Oriental Hotel, as he eyed a new development near the Thames Barrier in E16.
But many real-estate agents and property experts in east Asia believe a new wave of investment is just getting under way, as mainland investors develop a taste for international real estate, including postcodes up and down the UK.
“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,” says Charles Pittar, chief executive of Juwai.com, a website that aims to pair mainland buyers with property developers in places such as Australia, the US and the UK.
Pittar’s company, which lists 2.5 million properties and calls itself China’s largest international real-estate website, estimates that in 2014, Chinese outbound investment into residential and commercial property was more than $50bn (£38bn).
“I guess the key is: what is it going to become?” Pittar says. “Our view is that … it could be growing to somewhere around $200bn [annually] over the next 10 years.”
And Britain, despite its decision to leave the EU, is expected to be one of the key focuses, he adds. “The UK market, particularly post-Brexit, is really picking up.”
Pittar traces mainland China’s hunger for overseas property back to the turn of the century, just before China’s entry into the World Trade Organisation signalled the latest phase of its integration into the global economy. But the outflow of money has gathered pace over the past decade, and is set to grow further as middle-class investors from second- and third-tier cities get in on the game.
“It’s a big market now, but it is likely to be anywhere from two to four times the size in 10 years’ time,” Pittar says. “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.”
The 50-year-old property salesman made his first foray into mainland China in 2001, pitching a slice of Lambeth’s St George Wharf to would-be investors at a five-star hotel on Shanghai’s answer to Oxford Street.
“This one is Macau … This one is Shanghai,” he says, flicking through photographs on his smartphone of recent seminars where he advertised luxury London developments such as Clipper Wharf in E1 and Carrara Tower on City Road.
Li says some mainland investors agree to buy apartments on the spot. “If they are interested, they reserve the unit – they just use a credit card. They have Union Pay, Mastercard or Visa: £5,000.”
Many of his mainland investors are real-estate tycoons who have made a fortune from their country’s economic boom, and now “just want to take the profits, cash out and move some of their wealth overseas”.
But Pittar believes the story of ordinary, middle-class investors is more significant than that of China’s globe-trotting, Ferrari-driving elite. “What we read in the newspapers is always about the very wealthy Chinese who come and buy a £5m, £10m, £15m property. But the middle class is key. How big is the middle class? It could be 120 million. We tend to think it’s probably closer to 150 million.
“Once they’ve got somewhere to live in China, the reality is that the domestic market is quite expensive, so that’s why they are looking more for international opportunities. Like anyone who wants to preserve their wealth, diversification is important.”
Predictions that a new wave of investment from mainland China is on the horizon will stir further debate over the measures British politicians might use to protect local home buyers.
The anticipated influx of money from mainland China into the UK is set to affect not only London – historically the focus for much east Asian investment – but cities such as Manchester, Liverpool and Birmingham, to which more of the investment is now heading.
“Those seem to be the hotspots,” says Neil Jensen, the Hong Kong-based regional director for London estate agent Fraser & Co, who promotes developments in the capital to Asian investors.
Full article: ‘This is just the start’: China’s passion for foreign property (The Guardian)