Ping An Insurance bought the Lloyd’s Building in July this year
Research released last week by Jones Lang LaSalle shows that Chinese investment in London real estate has risen over 1500% since 2010, increasing from US$88.2 million to over US$1.63 billion at the end of quarter three 2013.
This increase means that Chinese investment in London real estate now accounts for more than 50% of the total figure for Chinese investment in Europe, which currently stands at US$3.1billion so far in 2013.
China Moves into Third Place in London
The increase in investment has repositioned China as the third-largest non-domestic purchaser in the UK, behind Germany and the USA which invested US$1.96 billion and US$1.79 billion respectively.
Damian Corbett, Head of Central London Office Investment at Jones Lang LaSalle said: “The rapid rate of growth demonstrates both the desire for Chinese investors to increase exposure to property assets and the high quality of stock here in London.
“Chinese sovereign wealth, insurance companies and high net worth individuals have been keen to place capital into buoyant overseas markets, with London very high on the priority list. We expect the pool of investors from China targeting London to grow significantly in the coming years. They will consider everything from urban regeneration sites through to trophy assets.”
Already this year China’s sovereign wealth fund, CIC acquired a London office park from Blackstone for US$1.28 billion.
Selling Everything But Residential?
Offices, retail and industrial units, hotels and mixed developments have proved to be the most attractive asset classes to Chinese buyers. Key deals from 2013 include the sale of Lloyds building to insurance company Ping An for US$426 million, the sale of an Oxford Street retail unit to a private investor for US$73.5 million and significant investment in development sites such as Dalian Wanda’s US$1 billion One Nine Elms project, and ABP Group’s US$1.6 billion project at the Royal Docks.
Jon Neale, Head of UK Research at Jones Lang LaSalle said, “It seems likely that the role of Chinese investors will grow substantially over the coming years. Not only is the population enormous, but the pace of economic development – while slower than over the past decade – will still be unparalleled in human history.”
The surge in investment is due in part to moves by the Chinese government late last year to allow Chinese insurance companies and wealth funds to invest more of their cash overseas. As long as such policies remain in place and western assets continue to look like bargains, the trend in 2014 should be for more London acquisitions by Chinese firms and wealthy individuals.
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