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Hong Kong political unrest and UK Brexit: HK investors to turn to UK Real estate?

Political protests in Hong Kong have captured the world’s attention in recent months, with demonstrators closing streets and the airport, and Chinese forces amassing near the border with a none too subtle threat of violent reprisal.

In the past, Hong Kong has long been the premier destination for doing business in Asia- a gateway to China, and the rest of the region. More than two months of protests have heavily affected Hong Kong’s economic, if the disturbance lasts a longer period of time, definitely the confidence of international investors and local buyers would be very much tarnished.

This parallels the situation in the UK, where financial elites could soon embrace a low-tax, low- regulation future following a no-deal Brexit driven by populist concerns about immigration and inequality. Whilst investment interest from other foreign buyers has seemingly dropped after the country’s decision to leave the EU, Hong Kong and China are standing strong, ready to invest when the right opportunity hits.

UKLEJU shortlisted a few statements from leading developers and agencies to analyse current situation with the Hong Kong investors.

1. Savills’ director, central London investment, Jonathan O’Regan said: “We are definitely seeing a recent upswing in investor interest from Hong Kong, which could be attributed to the political situation there.”

Today, after high profile protests at home, more than half of young people in Hong Kong wish to seek a better and freer life elsewhere. In London Capital, modern inner-city apartments present a sound option for young city workers seeking conveniently located accommodation while the shortfall in affordable starter homes offers further opportunity for buy-to-let investors.

2. Skipton International saw a 65% rise in BTL mortgage from Hong Kong investors in 2018 when compared to 2016.

This fact suggests that the enquiries into the UK from Asia for mortgages have increased in the past few months, mainly from Hong Kong where property prices are infamous for its most affordable prices in the world. As political unrest continues to impact the local market, HK investors are increasingly looking to the UK property market for their next investment.

3. James Beckham, head of central London investment in CBRE, said: “Hong Kong investors have for a long time been some of the most prolific outbound sources of Asian capital.”

Since Brexit, there is a feeling that Hong Kong investors are gently starting to be more inquisitive towards London real estate again as sterling begins to look weaker against their domestic currency and the US dollar and possibly, due to the political anxiety in their home country too. UK capital, London’s strong fundamentals remain very attractive particularly when there are some challenges within Hong Kong itself.

4. Christ Brett, head of international capital at CBRE, also mentioned that investment into London property coming from Hong Kong buyers was on par with China.

(Source from Knight Frank)

The UK property market is particularly popular because of its proven past performance, delivering substantial price increases and returns on investment. With a steadily increasing market, HK investors whose looking to invest in valuable properties can have confidence in long-term stability and growth of UK.

5. Research by JLL found that over half of UK residential property investments now originate overseas, with Hong Kong cities as one of the fastest growing investment markets.

This high level of enquiries comes after widespread protests in Hong Kong. There are evidences to prove that Hong Kong residents are increasingly considering jumping ship due to Hong Kong’s political uncertainty. High level of inquiries about residency and citizenship elsewhere are made, while private banking clients are making inquiries about moving accounts to Europe countries.

6. Hong Kong investors will continue to take the opportunity to step into the London market, like a trend we expect to continue for the foreseeable future, according to Knight Dragon, the HK leading developer in UK.

UK has its blend of modern and historic, alongside a stable political landscape, which gives the country-wide international appeal and provides encouragement to Hong Kong investors that they are putting their resources into a safe environment.

7. Tourists from Hong Kong and mainland China have started a trend. A new class of traveller is hitting the UK and following an increasingly well-trodden path- they arrive in London, visit Manchester and Glasgow, before flying back home.

In investor’s point of view, buying UK property is a popular way of building financial security for later life- a tangible asset that can offer two separate stream of income, flexibility and relatively secure market for the risk- averse.

Overall, the recent political unrest in Hong Kong has sparked a considerable rise in inquiries from Hong Kong investors for UK real estates. On the other side, political uncertainty of Brexit continues to have a tangible impact on activity in the UK property market.

Today, looking to the UK property market for investment as an overseas investor, continues to make sound economic sense. The UK property market is rich in diversity, each presenting its own features and advantages for the international investor. Despite the UK Brexit or HK protests, all the proved property transaction is a vote of confidence in London and the United Kingdom to retain a firm and visible hold on as an investment hotspot.

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