Leading prime London estate agent Harrods Estates has just completed trips to Hong Kong and Beijing in order to build important relationships with high net worth individuals (HNWIs) looking to invest in London’s property market. Having visited China for the past seven years, Harrods Estates predicts that the Chinese are set to become London’s biggest investors in prime London property as the super wealthy begin to bring their money into the UK.
Simon Barry, Head of New Residential Developments at Harrods Estates, commented: “There is a huge amount of wealth in China and although we have started to see investment in London property in the last five years, the focus has been on off-plan new-build developments ranging from £500,000 to £5 million. This is just the beginning of a vast amount of wealth from China, and we expect this will increase dramatically over the coming years, when Chinese billionaires will look to spend anything from £5 million to £50 million.”
Over the past two decades, wealth generated by China’s incredible rate of economic expansion has flowed into Hong Kong and Singapore through corporate investment, much of which has fueled the demand for London property. Harrods Estates has seen investors from Beijing, Shanghai, Hong Kong and Singapore, with mainland China still untapped due to an initial focus on the domestic property markets. This is now set to change as a handful of developers and estate agents explore the opportunity to reach out to mainland China, where there has not been direct contact with overseas property markets until now.
Simon added: “We expect to see more high level Chinese executives finding time to travel to London and other international centres, seeking out new markets and new opportunities outside of China. At present there are capital controls in place restricting potential Chinese purchasers taking out US$50,000 per year, however an announcement on a revised version of the Qualified Domestic Individual Investor programme (QQII 2) is imminent. This is expected to allow HNW Chinese working in the ‘Free-trade Zones’ of the major six cities, with assets in China in excess of circa US$160,000, to export up to 50 per cent by value of their net worth. For corporate investment the capital limit would rise significantly to US$1 billion.
“In addition, China’s slowing economy and its recent stock market crash, which saw the Shanghai Composite Index lose 30 per cent in value over a three week period in mid-June and a further plummet in value in late July, will actually encourage investors to look at other opportunities.”
Harrods Estates advise that one of the primary motivators for Chinese property investment in London will be education, as increasing numbers of Chinese parents are choosing British education for their children. London’s culture, retail and lifestyle will also be key contributors to increased investment in London property. New-build properties will continue to be popular choices for investment, however the estate agent has also seen an increased interest in period homes with brand new refurbished interiors.
Shirley Humphrey, Director at Harrods Estates, commented: “At Harrods Estates we recognise the importance of building relationships by offering a high level of customer service which goes above and beyond. We have been travelling abroad to destinations such as the Middle East, Russia and China to network and meet our clients on a one-to-one basis for the past 12 years. Harrods Estates is the real estate arm of the world famous Harrods department store, a brand which is renowned for luxury, service and quality, and this adds huge value, particularly when hosting special events for these ultra high net worth individuals.”
For further information about Harrods Estates please contact T: +44 (0)207 225 6506 or visit www.harrodsestates.com