How will Brexit impact Chinese investment in UK property?

Chinese demand expected to continue despite Brexit

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

And now, despite the heat of the Brexit debate leading up to the shocking referendum results of Britain voting 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 demand would go up if Britain exited the EU.

Not only does a weaker pound make for enticing investment opportunities, the UK has always offered appealing lifestyle factors that will continue to be 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 surely made industry experts fairly confident about forecasts that Chinese investment in London alone 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 in terms of consumer enquiry value.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, unveiled 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 – despite some holding back from transactions until after the vote – 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. 

Juwai.com CEO Charles Pittar even notes that developers and estate agents are likely sharpening their marketing pitches at this very moment, pointing to Brexit as 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,” he adds.

This is in line with the 46% of respondents in the Juwai Brexit Survey, who indicated they felt there would be more demand for UK property if Britian exited the EU.

“If the fall in the pound persists and if local buyers continue to sit on their hands to some degree, that will create a more appealing environment for international investors...and Chinese buyers are much more likely to take note of property prices, exchange rates, available inventory and economic conditions than the simple fact of Brexit, however,” Pittar says.

Chinese consumer enquiries into U.K. property on Juwai.com in June has remained strong with a positive outlook expected still, and we'll be watching closely to see just how things unfold for UK property seekers as Brexit looms.

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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

5 Reasons to invest in London

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80% of London units sold to overseas buyers

"In the latest twist in the whole “squeezed out” debate, media reports in the United Kingdom have claimed that 80 percent of the units in a series of new Thameside developments have been bought by foreign purchasers.
As is generally the case, the definition of “foreign” isn’t entirely clear, but according to statistics obtained from Knight Frank by the Guardian, buyers from the Far East accounted for a quarter of properties sold in the four as-yet unnamed schemes. Around 20 percent have seemingly gone to buyers from the Middle East.
The newspaper claimed that 40 percent of the units were sold to investors, and has picked up on Knight Frank’s marketing material for a new scheme at Vauxhall Cross, which is quoted as saying that London is “widely regarded as the ‘gold bullion’ of international property markets” and goes on to talk about returns that have been “better than…the FTSE 100 and gold”.
A spokesman for Knight Frank explained that this level of foreign investment only related to “a narrow percentage of the market, and in the total market across London it is a much smaller proportion”.

Last year, Savills went in-depth on the subject in its World in London report. The agency found that 68 percent of prime London private residential property were owned by domestic U.K. buyers – but that 37 percent of Londoners were born overseas."

Source from property guru

Insider news is that 50% of buyers who bought Royal Wharf, a new launch condo in London are Singaporean buyers. Why are Singaporeans so invested in UK property?

1.) London is like a mini Singapore

2.) UK is the country we are most familiar with in Europe because we were once ruled by the British, hence, our education system and governing system has some similarities with London.

3.) London property are similar to Singapore. Pricey and small yet the value still goes up. 

4.) Who wouldn't want to own a property in UK? 

Good time to buy Europe Property?

The euro is shaping to be the biggest casualty of Switzerland’s decision to scrap its currency cap. 

Soon after the Swiss National Bank unexpectedly ended its three-year policy of keeping the franc weaker than 1.20 per euro, bearish bets on Europe’s common currency soared. While setting a record low versus the franc yesterday, the euro also plunged 3.5 percent against a basket of 10 developed-nation peers, the most since its 1999 debut, and reached an 11-year low against the dollar today. 

The SNB’s decision removes a key pillar of support for the euro, boosting the odds that its recent slide will accelerate. Companies from Goldman Sachs Group Inc. to Pacific Investment Management Co., the world’s biggest manager of active bond funds, have in recent days talked about the euro falling to parity with the dollar, a 14 percent decline from its current level. 

Options Jump 

The difference in the cost of options to sell the euro against the dollar, over those allowing for purchases, jumped by the most in almost two years yesterday, and extended its advance today to the highest since August 2012. 

The euro also sank below parity with the franc yesterday to an all-time low of 85.17 centimes, recovering to 98.88 today. 

In defending its cap on the franc, the SNB almost doubled its holdings of the 19-nation currency to 174.3 billion euros ($202 billion) since September 2011. Speculation the European Central Bank is only days away from announcing a government-bond purchase program, or quantitative easing, at its Jan. 22 meeting had already weakened the euro against its major peers. 

“The euro can’t find a friend for love nor money,” said London-based Kit Juckes, a strategist at Societe Generale SA, which predicts a decline to $1.14 by year-end. When one of the biggest buyers of euros “leaves the building,” losses are inevitable, he said. 

Options traders appear to agree. The premium on three-month contracts to sell the euro versus the dollar, over those to buy, rose 0.4 percentage point in the wake of the SNB announcement and another 0.5 percentage point today. 

That took the cost premium to 2.17 percentage points, 25-delta risk-reversal data compiled by Bloomberg show. Yesterday’s jump was the biggest one-day increase since February 2013. 

The shared currency’s next-biggest daily decline was a drop of 1.6 percent on Jan. 5, 2009, when the dollar surged as details emerged of a U.S. fiscal stimulus plan to tackle the global financial crisis. The franc jumped 21 percent against the basket yesterday as policy makers removed the euro cap.

So, is it a good time to buy properties in Europe??

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffett

Seize the opportunity to buy when prices are low!