Chinese investment into UK property to increase in 2016

Chinese investment into UK commercial real estate this year will exceed 2015 levels, according to Savills.

The increased Chinese focus on UK real estate, Savills said, is due to the fact the market remains buoyed by the Chinese president's state visit in October 2015, Britain’s status as an investment safe haven and, in particular, London’s continued attractiveness.

From 1 January - 29 February this year, £560 mln (€716 mln) of Chinese deals were transacted in the London market, putting volumes on track to exceed 2015’s total annual turnover of £1.2 bn, says Savills.

Highlights include Chinese state-owned real estate investor, Poly Real Estate, completing its first purchase in London in January with the £145 mln acquisition of Ludgate West, 5 Fleet Place and China Overseas Land and Investment’s purchase of the Helicon Building, South Place, from Deutsche AWM for £145 mln in February.

Chinese investors continue to be driven to invest internationally by their Government’s various capital liberalisation initiatives and long-term national strategy to invest globally in order to ensure its financial stability. Savills says London is a top destination for capital due to the diversity of opportunities available, swift transaction times, and liquidity of the market.

'Although there is a significant amount of capital chasing London real estate, with a finite level of supply, there are still a number of assets available which offer an attractive yield profile. Long term income streams, redevelopment opportunities and mixed-used schemes entering the market provide a variety of return profiles, which in turn attract an array of investors,' says Rasheed Hassan, head of Savills crossborder investment.

'In addition, the profile of the investors we’re seeing enter the market includes Chinese developers who are seeking higher returning development opportunities, targeting mixed-use and residential led schemes, rather than core assets within London.'