Harrods Estates predicts that the Chinese are set to become London’s biggest investors in prime London property as the super wealthy begin to bring their money into the UK.
Simon Barry, Head of New Residential Developments at Harrods Estates, says: “There is a huge amount of wealth in China and although we have started to see investment in London property in the last five years, the focus has been on off-plan new build developments ranging from GBP500,000 to GBP5 million. This is just the beginning of a vast amount of wealth from China and we expect this will increase dramatically over the coming years, when Chinese billionaires will look to spend anything from GBP5 million to GBP50 million.”
Over the past two decades, wealth generated by China’s incredible rate of economic expansion has flowed into Hong Kong and Singapore through corporate investment, much of which has fuelled the demand for London property. Harrods Estates has seen investors from Beijing, Shanghai, Hong Kong and Singapore, with mainland China still untapped due to an initial focus on the domestic property markets. This is now set to change as a handful of developers and estate agents explore the opportunity to reach out to mainland China, where there has not been direct to overseas property markets.
Barry says: “We expect to see more high level Chinese executives finding time to travel to London and other international centres, seeking out new markets and new opportunities outside of China. At present there are capital controls in place restricting potential Chinese purchasers taking out USD50,000 per year, however a revised version of the Qualified Domestic Individual Investor programme (QQII 2) has recently been announced – though is yet implemented. The programme will be open initially to anyone working in six major cities with assets in excess of circa USD160,000, and will allow them to export up to 50% by value of their net worth. For corporate investment the capital limit would rise significantly to USD1 billion.
“In addition, China’s slowing economy and its recent stock market crash, which saw the Shanghai Composite Index lose 30% in value over a three week period in Mid-June and a further plummet in value in late July, will actually encourage investors to look at other opportunities.”
Harrods Estates advise that one of the primary motivators for Chinese property investment in London will be education as increasing numbers of Chinese parents are choosing British educations for their children. London’s culture, retail and lifestyle will also be key contributors to increased investment in London property. New build properties will continue to be popular choices for investment, however the estate agent has also seen an increased interest in period homes with brand new refurbished interiors.
Harrods Estates recent visit to China included a series of one to one meetings and networking events. In Beijing, Harrods and Harrods Estates sponsored Hurun’s ‘Eton Night’ event at a private dinner for 80 high profile guests in the Ballroom at the Shangri-la World Summit Hotel. Michael Ward, Managing Director of Harrods gave a speech as did Rupert Hoogewerf from Hurun and William Van Bergen from BE Education Ltd.
Shirley Humphrey, Director at Harrods Estates, says: “At Harrods Estates we recognise the importance of building relationships with high net worth individuals. We have been travelling abroad to destinations such as the Middle East, Russia and China to network and meet our clients on a one to one basis for the last 12 years. Harrods Estates is the real estate arm of the world famous department store, a brand which is renowned for luxury, service and quality and this adds huge value, particularly when hosting special events for these ultra high net worth individuals.”
Harrods Estates is hosted 50 Chinese high profile guests on 8th August at the Harrods department store. The afternoon comprised of a series of presentations on investing in both business and property in the UK.