2015: the Year of US and Chinese Investment?
If the foreign investment trends of 2014 are anything to go by, 2015 looks to be a year dominated by Chinese and US investment. 70% of the spending in the London market for 2014 was by foreign investors, according to Savills: that accounts for somewhere near £14.6 billion. Of this investment, Chinese companies and individuals were responsible for a larger amount than all of the buyers from Europe put together. These figures illustrate a fact about the London property market that has frequently been observed: London relies on foreign investment for the future, and the prime market draws in a disproportionate amount of overseas interest. 2014 also saw a rise in private investors, according to Savills which act on behalf of many overseas buyers for the prime and luxury market.
In 2014 US investors spent £3.4 billion in London. These investors have included Blackstone, Kennedy Wilson, Hines and Northstar. This is not only continued interest from previous investors, but also a significant number of new companies entering the market. Far from the insecurity experienced by UK citizens in the 2015 housing market, foreign confidence is on the rise for overseas investment properties regardless of the upcoming general election or the delicate London property bubble.
Investors from China spent £2.2 billion last year, with investors often making multiple transactions. Chinese investors, according to the Savills Chinese Capital Markets Specialist, are predominantly insurance companies and developers. With restrictions being lifted on overseas investment London is likely to see a great deal more activity from Chinese companies. The ongoing rental growth in London is a particular draw to Chinese investors, their threshold being no less than 4.5%. The most significant Chinese companies investing in London last year were China Life, Shanghai Greenland, Ping An Trust and China Overseas Land Investment. Although Chinese buyers made up the largest investors from Asia, Savills has also acted for Taiwanese and Singaporean investors.
Middle Eastern countries also made up a significant portion of the 2014 investors, with Qatar topping the tables at £1.2 billion. Investors from Turkey, Israel and Yemen have also seen some activity in London’s prime markets.