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Chinese Market

In 2017, the amount of Chinese investment in the UK reached a peak of $28.6 billion (£20.4 billion), increasing by $17.53 billion (£12.52 billion) from 2016. Since then the amount of investment fell to a six year low of $6.8 billion in 2018 and increasing to back over $10 billion in 2019. This is largely due to Chinese policy shifts and investment screening regulations. After a massive spike in 2017, the UK inevitably saw in-bound investment from China fall dramatically, yet the UK still received more investment than any other country in the Western world in 2018. 

Although Brexit is a concern, Chinese investors’ appetite to invest in the UK remains strong. In 2019, 30% of Chinese foreign direct investment (FDI) in Europe went to the UK. The increased investment in 2019 is partly due to currency fluctuations brought on by the UK’s pending exit from the European Union.

Chinese investors continue to show interest in the UK property market, making 213% more enquiries in July 2020, after plummeting from April to June during the height of the coronavirus pandemic. Chinese demand for UK property have soared since July, with the recent stamp duty holiday providing a further boost. Chinese buyers have fears of higher stamp duty in 2021, so are looking to act early. Not only will the holiday expire, but foreign buyer’s stamp duty rates are set to climb 2% higher next year. 

A large portion of Chinese buyers are purchasing property for their children to use while studying in the UK, even if the actual dates of study might be years away. According to the university of Oxford’s migration observatory, work and study is the most common reason for moving to the UK making up 71%. There is also a significant number of investors purchasing build to rent properties, especially in second-tier cities such as Manchester and Bristol. Many believe that the UK’s property market, despite the Brexit outcome, will continue to be an attractive, lucrative ‘safe-haven’ for overseas buyers to invest in and benefit from capital growth and strong rental yields.

Below is the statistics of the most influential Chinese firms that invest in the UK.

The UK, in particular London, remains a key global target for Chinese buyers, who are increasingly taking a long-term view to investment based on the strong fundamentals of the UK economy, clarity of the judicial system and world-class educational institutions. As such, these buyers are less sensitive to short-term economic and political uncertainty, which in turn provides opportunity to secure best-in-class real estate in areas with strong growth potential. 

While London remains the most popular destination for Chinese FDI, according to last year’s report from commercial real estate services firm CBRE 18 per cent of total outbound investment targeted London. Birmingham and Manchester are now also becoming increasingly popular as London values continues to grow. Within London, Chinese buyers are also now looking outside of traditional ‘golden postcodes’ and focusing on areas undergoing regeneration. One such area is Brentford, in west London, where the area is being redeveloped – a significant eight-year masterplan which will ultimately deliver a new town centre alongside new homes, public space, and retail and commercial offerings. 

From 31st January onwards, Hong Kong BNO (British national overseas) visa will be open for application. According to official estimates by the home office, more than one million Hong Kong nationals will arrive in Britain over the next five years under the new visa program. The government agency expects that 500,000 of them will come to the UK in the first 12 months. The central assessment of the economic net impact of the arrivals is a positive boost to the UK economy of between £2.4bn and £2.9bn over five years with the majority of this in the form of additional tax collected.