London captured the bulk of Chinese investment into commercial and residential real estate in the first half of 2014 compared to other global gateway cities, according to research from JLL.

London captured the bulk of Chinese investment into commercial and residential real estate in the first half of 2014 compared to other global gateway cities, according to research from JLL.

Of the $5.4 bn (€4 bn) invested abroad in H1 by Chinese players, London attracted $2.3 bn, followed by San Francisco at $548 mln and Chicago at $468 mln.

London’s appeal reflected efforts by the city authorities to attract more mainland China capital into major infrastructure projects, which has spilled over into residential and commercial markets, JLL said.

‘London remains the leading destination for Chinese capital, with its profile having been reinforced recently by visits to China by the Mayor of London Boris Johnston’s office which JLL helped to coordinate by organizing several high level meetings with top Chinese developers and investors,’ said Darren Xia, director of International Capital Group (ICG) at JLL China.

‘Given the continued rise in Chinese outbound investment over the first half of the year and the pipeline of groups looking to invest outside of China, full-year 2014 outbound investment should easily eclipse the 2013 level of $11 bn,’ he noted.

Commercial investment took the lion’s share of the total real estate spend in H1 at almost $4 bn (€3 bn), however residential property saw most growth, with investment up 84% at $1.5 bn compared with the first half of 2013.

Notable deals in the second quarter were shared between London and San Francisco, JLL found. Institutional investors targeted London with China Construction Bank, China Overseas Holdings and China Life all buying core CBD office assets. CBD office assets were also popular in San Francisco but a private investor snapped up the 225 Bush Street asset.

Dalian Wanda became one of the first Chinese investors into the Spanish market in Q2 with the purchase of an office asset in Madrid from the Santander Banking Group. The introduction of the Golden Visa in many Southern European counties has also raised the profile of these locations amongst Chinese mainland investors, JLL said.

David Green-Morgan, global capital markets research director at JLL, said: “Although the Chinese investors have been very active in the world’s major cities in the first half of 2014, we are seeing them energetically pursuing opportunities right across the spectrum of geographies and sectors. For first time overseas investors it makes sense to target the most liquid cities, but for the more experienced, looking at smaller less liquid markets like Spain where yields are higher but so are the risks, it is a natural progression.’