Hong Kong and mainland Chinese investment in Prime Central London residential property market are soaring amid the COVID-19 pandemic.
December 2019 to June 2020 data from Beauchamp Estates, a London-based real estate agency, revealed that buyers from mainland China and Hongkong currently accounts for 15 percent of international buyers of properties across prime central London valued above $1.2 million and 20 percent of transactions above $12 million.
These international buyers now overtake investors from Russia and India. Over the past six months, since the UK General election of 2019, more than £300 million worth of luxury residential properties were sold to Hong Kong buyers in prime locations such as those located in Belgravia, Islington, and Knightsbridge.
What these buyers would typically buy are either new homes or historic homes that have been refurbished with luxurious interiors, the report said. Following Hong Kong and mainland Chinese buyers as the largest groups of overseas buyers are Russians and Indians.
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A separate report by Aston Chase also noted a spike in buying activity from Hong Kong nationals, particularly in substantial family homes, as they look to upsize their pre-existing London properties. Hong Kong Chinese have traditionally been investing in London, buying smaller properties, and often newly built ones either to rent or to be used by their children while studying in the UK.
The spike in interest for substantial family homes is driven by the Hong Kong nationals' planning ahead for possible permanent relocation in the UK. Hong Kong Chinese interest in London home has been on the rise since the anti-government protests began last year. However, inquiries from Hongkongers have accelerated, rising 50 percent, as concerns grow over a possible London re-shutdown due to a potential second wave of COVID-19 infections.
The Beauchamp Estates report, as cited by Property Industry Eye, divides these Chinese investors into five groups, with the first being those that purchase one- and two-bedroom new-build rental investment properties valued up to £2 million. The properties are located in areas including Islington and the River Thames in Battersea, Canary Wharf, the City, and Chelsea and Fulham.
The second group refers to affluent upper-middle-class Hong Kong and Chinese families. They typically spend between £5 million and £10 million for family home/luxury pied-a-terre or between £750,000 to £1.5 million for an apartment in London. Priority to this group of buyers is proximity to a good school or university, and Marylebone and St John's Wood are on top of their list because they are near the Chinese Embassy.
The super-rich wealthy buyers from mainland China and Hong Kong comprise the third group. These are the type of buyers who spend up to £15 million on a trophy property in London's prestigious addresses. They prefer mansions priced from £25 million to over £200 million or penthouses in trophy apartment buildings with prices ranging from £20 million up to £80 million.
The fourth group includes those from Hong Kong's and China's large companies and property developers, which invest commercial properties or undertake direct joint venture residential properties.
Chinese Sovereign Wealth entities such as CIC comprise the fifth group of buyers. This group has been London's real estate's major investors. The trend could continue due to the deteriorating Chinese bilateral relationships with the U.S., Canada, and Australia. Moreover, the overseas buyer tax rate in Canada (20 percent) and Singapore (20 percent) are much higher than London's.
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