The Chinese investors are still there!
2015-10-27
The recent fall in the Chinese stock market in August has led to the Chinese government devaluing RMB. The question is, has this caused a stir in the London property market? There are rumours about off plan unit owners that are eager to re-sell before completion around Battersea Power Station. The Telegraph reported that the value of some off-plan developments has indeed decreased. Knight Frank statistics show the percentage of Chinese buyers has dropped from 10.9% to 9.4% for prime London locations.
A relatively small, but still a significant dent in the London property market. Firstly, we should remember that China’s stock market doesn’t reflect the fundamentals of the country’s economy as more than 65% of its stock market represents government holdings in listed state-owned enterprises. Secondly, it is a one-off government intervention in devaluing RMB on 24th of August. To sum up, it seems highly likely that overseas properties will continue to be a key investment option for wealthy Chinese investors. There might be some price correction for property values around Battersea Power Station. In addition it seems that we may see a gentle and temporary slowdown in sales of prime London property.
With all this taken into consideration, the construction industry is still behind its target to build up enough properties to meet demand. Chinese investors still queue up to place orders at launch events within Canary Wharf area. With prices much more stable now than the boom that plateaued in 2012/2013 investors will be looking to the next 7-8 year cycle.
Following George Osborn’s Beijing visit in September, a series of major Chinese investments in Britain are expected to be unveiled soon. What's more, with President Xi Jinping’s first state visit to the UK in October, it is believed there will be more business collaborations to look forward to. The potential for Chinese investors’investment power is not to be underestimated.
Chinese Investors in UK property-
Type 1: Tier 1 Applicant investors
Statistics show that 375 applicants received Tier 1 visas in 2014 – double the amount in 2013. Chinese applications account for 43% of Tier 1 applications. Even before receiving visas they actively invest in BTL properties once they have purchased self-use residential property. Many also invest in good school catchment areas for their children’s education.
Type 2: BTL long-term investors
The Chinese Administration of Foreign Exchange restricts people from transferring money overseas, the limit is equivalent to $500,000 per person annually. However, those who hold HK bank accounts or have financial investment companies to put the money in overseas accounts are exempt from this restriction. Therefore, they have more flexibility to invest in more BTL properties in the UK.
Type 3: Off-plan development short-term investors
Some investors instruct estate agencies to re-sell off plan units before the completion date. These investors are aiming to gain profit within a short period of time and then tore-invest. Those activities have however been dealt a blow as non-residents selling UK residential property are liable to pay for Capital Gains Tax on any gains made after 5 April 2015.
Type 4: Future Chinese investors
It is recorded that between 2013 and2014 there were 87,895 Chinese students enrolled in higher education courses in the UK, more than from the continent. Many of their parents have invested in properties before their children start to study in the UK. Even after their graduation, Chinese parents have assisted their children to get on property ladder and invest in London properties.
Source:http://www.londonpropertyreview.co.uk/south/
With all this taken into consideration, the construction industry is still behind its target to build up enough properties to meet demand. Chinese investors still queue up to place orders at launch events within Canary Wharf area. With prices much more stable now than the boom that plateaued in 2012/2013 investors will be looking to the next 7-8 year cycle.
Following George Osborn’s Beijing visit in September, a series of major Chinese investments in Britain are expected to be unveiled soon. What's more, with President Xi Jinping’s first state visit to the UK in October, it is believed there will be more business collaborations to look forward to. The potential for Chinese investors’investment power is not to be underestimated.
Chinese Investors in UK property-
Type 1: Tier 1 Applicant investors
Statistics show that 375 applicants received Tier 1 visas in 2014 – double the amount in 2013. Chinese applications account for 43% of Tier 1 applications. Even before receiving visas they actively invest in BTL properties once they have purchased self-use residential property. Many also invest in good school catchment areas for their children’s education.
Type 2: BTL long-term investors
The Chinese Administration of Foreign Exchange restricts people from transferring money overseas, the limit is equivalent to $500,000 per person annually. However, those who hold HK bank accounts or have financial investment companies to put the money in overseas accounts are exempt from this restriction. Therefore, they have more flexibility to invest in more BTL properties in the UK.
Type 3: Off-plan development short-term investors
Some investors instruct estate agencies to re-sell off plan units before the completion date. These investors are aiming to gain profit within a short period of time and then tore-invest. Those activities have however been dealt a blow as non-residents selling UK residential property are liable to pay for Capital Gains Tax on any gains made after 5 April 2015.
Type 4: Future Chinese investors
It is recorded that between 2013 and2014 there were 87,895 Chinese students enrolled in higher education courses in the UK, more than from the continent. Many of their parents have invested in properties before their children start to study in the UK. Even after their graduation, Chinese parents have assisted their children to get on property ladder and invest in London properties.
Source:http://www.londonpropertyreview.co.uk/south/
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