Chinese buyer demand in the wake of Brexit
Yicai Global
/SOURCE : Yicai
Chinese buyer demand in the wake of Brexit

The UK may be one of the smallest countries in the G7, but the Chinese passion for investing there has been one of the biggest love affairs in the property industry.

And now, despite the shocking results of the referendum in which Britain voted to leave the European Union (EU), Chinese buyer demand for UK property is still expected to remain strong.

46% of respondents in a recent Juwai Brexit Survey said they felt demand for UK property would go up if Britain exited the EU.

Not only does a weaker pound make for enticing investment opportunities, the UK has always offered an appealing lifestyle and excellent educational institutions that will continue to be a strong basis for Chinese to invest in UK property.

Back in 2012, Chinese investors reportedly bought 5% of all Central London properties sold1 –that same year Hurun Report ranked the UK among the top five travel locations for Chinese high-net-worth individuals (HNWIs)2.

Now, in the first two months of 2016, Chinese invested £560.3 million (US$792 million) in London-based commercial property – equal to 40% of the total of £1.2 billion (US$1.69 billion) recorded for the whole of 2015.3 Numbers like that have made industry experts confident enough to forecast that Chinese investment in 2016 will exceed that of 2015.

Juwai Data shows a similar trend. Chinese enquiries for UK property on Juwai.com grew 17.98% in Q1 2016 alone, with enquiries on property listings valued at $1.79 billion.4

Chinese buyers not expected to be negatively impacted by Brexit

The Juwai Brexit Survey, which sourced the opinions of industry experts and investors in both the UK and China, revealed that most respondents believed the Brexit impact would be insignificant in terms of Chinese property investment in the UK.

In fact, although UK respondents were more uncertain, China respondents indicated that international demand for UK property was expected to increase no matter the outcome.

Furthermore, 71% of China respondents said there would be either no change or more demand for UK property should Britain leave the EU.

Juwai.com believes the UK will continue and even grow as an important destination for Chinese property investment. Chinese consumers see UK property as a relatively safe investment compared to alternatives, and consumer demand is in large part driven by lifestyle factors, with education being the top motivator.

For students continuing their educational pursuits overseas, the UK still offers world-class universities and schools, which will continue to be in high demand. With all these factors combined, Chinese demand for property investment in the UK should remain strong for years to come.

Developers and estate agents are already using their new marketing pitches, as Brexit is creating an opportunity for offshore buyers to snap up properties at bargain prices.

The vote for Brexit introduces some uncertainty into the market. In a backwards way, this could promote foreign property investment. If the pound loses ground on a sustained basis and domestic buyers drop out of the British property market, the results of the vote could lead to increased opportunities and a more appealing environment for foreign investors.

Sources: 1. Knight Frank: International investors spent £2.2 billion on central London new-build property in 2012; 2. Hurun Report: Europe Winning the Hearts of Chinese Luxury Travelers; 3. Savills: Chinese investors continue to pursue UK assets; 4. Juwai IQ Data Q1 2016; 5. Juwai Brexit Survey

About the Author:

Mr. Charles Pittar is CEO of Juwai.com, the No. 1 Chinese international real estate website, with more than 2 million users every month looking at real estate listings from 89 countries.

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