Indicators suggest Brexit has not pushed UK property off the radars of Asian investors.
As the UK makes move to depart from the EU, figures from real estate firm JLL reveal that that confidence remains strong among Asian investors for UK property. Transaction levels for the first quarter of 2017 were high. In fact in local currency terms the highest since 2015. The UK is also Europe’s most active real estate market. This is a move up from third position in 2016.
News of Brexit last year sent ripples of concerns across the globe. An air of uncertainty loomed over the country and questions were raised about the attractiveness of the UK as an investment destination. However this has created a window of opportunity for overseas investors.
“With the sterling depreciation and slight drop in capital values, Asian investors – particularly private buyers from Hong Kong and China – have been the most active in London since last year’s Brexit vote,” says David Green-Morgan, head of research, global capital markets at JLL. “The depreciation and capital values drop means that UK commercial real estate is now discounted by 16 per cent on average to overseas capital since the June 2016 referendum. The net yield of City prime buildings is also very attractive.”
One of the biggest spenders are Hong Kong residents. A population which has already invested nearly USD 3 billion on UK property for the first three months of 2017. A rise from the USD 842 million that was spent in the first quarter of 2016. Investors have eyed up commercial space in two of the capital’s most popular areas. London’s West End famed for its retail presence and the City known as the financial hub.
Chinese continue their spending sprees
Big players in the investment world, the Chinese have been restricted by their own country on the outward flow of their capital. However USD 7.5 billion still left the country in the first three months of 2017. This is an increase of 84 percent.
“The new outbound capital control measures are likely to slow down overseas investments, as Chinese corporates and individuals will find it harder to invest outside of China. This is driving an increase in demand for domestic real estate investment going forward,” says Dave Chiou, Director of Capital Markets Research, China at JLL. “However, for Chinese companies with established overseas presence, the impact could be limited as they can use funds regenerated from overseas branches for investments.”
