Lunar New Year: Chinese Property Investment in the UK
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Will the Year of the Dragon Bring Big Investment in UK Property?
With the Lunar New Year on the horizon, we wanted to take a look at why the UK is such a popular property destination for Chinese buy-to-let investors.
Big events in China, such as Golden Week, can lead to a surge in overseas investment, so is it possible that we will see a similar uptick during the New Year season?
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Chinese Investors Look to the UK for Property Investment Opportunities
UK property was a popular choice last year for Chinese investors. Some of this was put down to a phenomenon known as ‘revenge buying’ in China. This refers to a surge in consumer activity after a period of restriction. In this case, it was referring to the COVID-19 pandemic, when international activities were limited. Property revenge buyers were spending with a vengeance in order to make up for lost time and opportunities during those years, making them top of the list for international residential purchases, according to property portal Juwai IQI.
Juwai IQI has also stated that there was a significant increase in Chinese buyers purchasing residential real estate. They spent over $3.4 billion on overseas properties, a rise of $1 billion on the 2022 figure.
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Why are Chinese Investors Betting on Overseas Investment?
A report from EY has previously stated that the number of affluent Chinese households that can afford international real estate is predicted to increase by 50% in 2025. China’s rapidly growing middle class and their increased income, as well as historically high savings rates among Chinese consumers, contribute to a growth in overseas property investment.
Another factor is the trend towards portfolio diversification on the Chinese investment scene, with many wanting to add international real estate to their assets. UK property can offer diverse opportunities for investment, including residential, commercial, industrial, and student accommodation.
All this points to more interest in the UK market from Chinese investors moving forward into 2024.
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Which UK Cities are Chinese Investors Targeting?
Historically, Chinese real estate investors have been drawn to London for their property ventures. In 2019, the Office for National Statistics showed that Hong Kong and Mainland Chinese buyers invested £7.69 billion in London real estate. At that time, there were 218,975 properties owned in London by Chinese and Hong Kong buyers, making London the most popular investment location for Chinese capital.
However, London isn’t the only destination drawing attention from Chinese investors. A report from 11K Consulting showed that Outer London and towns and cities near London, such as Watford, Read, Surrey, and Harrow, have seen increased interest from Mainland China and Hong Kong buyers. Other areas of interest such as propery investment in Manchester are becoming more popular to property investors.
In 2016, a BBC report found many investors are turning their sights from London to the North due to the Northern Powerhouse initiative. This trend has continued until now, as according to the Liverpool Post, the amount of Chinese and HK buyers in Liverpool has ballooned by 170% between 2017 and 2021.
Increased interest in Outer London and Northern cities implies that Chinese buyers are looking for a better deal, as Inner London property prices are substantially more expensive than the UK average.
Explore the UK property market in greater detail with our recent buy-to-let guides:
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