Talking Heads: On China's Golden Week & the London property market

By PrimeResi Journal

Over three quarters of Chinese have property purchase intentions in mind when they travel overseas, according to a recent survey, but will the upcoming extended national holiday result in a "bonanza" for the UK capital's agents and developers?

Real estate agencies around the world are gearing up to woo big-spending Chinese buyers during next month’s seven-day national holiday, according to a new report from the region, but how important is Golden Week to London’s prime property market – and to what extent is the current economic and political climate affecting investment decisions?

6.15 million Chinese travelled abroad during National Day Golden Week alone in 2017, and it’s expected that even more will be doing so this time around. The second extended holiday of the year, introduced in 2000, celebrates China’s National Day and is traditionally seen as a huge opportunity for international retailers.

Chinese tourists are ranked first in spending money overseas by the United Nations World Tourism Organisation, and splurged US$115 billion in various expenditure in 2017. Goldman Sachs has estimated that the figure will surge to US$450 billion by 2025, as the number of passport holders doubles to hit 240m by 2020.

Luxury shops are an obvious beneficiary, but research suggests that many Chinese visitors are also in the market for much bigger purchases.

77% of respondents to a recent survey by Chinese property portal Juwai , author of the aforementioned report, said they have property purchase intentions in mind when they travel overseas, with 49% stating they “will or may” schedule appointments to meet international real estate agents during their journey. Property hunting was picked as the second most popular activity while travelling overseas, behind only sightseeing.

Juwai International Consumer Travel Survey 2018

Despite a reported pullback in overseas investment in the face of recent political resistance and international sensitivity, it’s been calculated that Chinese real estate investors still spent a record $119.7 billion on both resi and commercial properties globally in 2017, up 18.1% on the $101.4 billion recorded in 2016.

Agents and brokers around the world now  “pull out all the stops” to cater for their Chinese clientele, says Juwai, with private tours in Rolls Royces and chartered coaches typically laid on to introduce potential customers to various property locations.

We asked a panel of top London-based prime property experts to share their experiences of Golden Week, get a steer on how their Chinese clients are viewing the UK market, and find out which properties or schemes are currently proving popular…

London’s boutique developments are becoming increasingly popular amongst Asian buyers (Above: PPR Estates’ Adelphi Terrace project in Covent Garden)

Prime Punditry

In our experience Chinese interest in London real estate has actually heightened in the last year

  • Catharine Che, Head of China Region at UK Sotheby’s International Realty

“Golden Week is an extremely important point in the calendar for the prime property market, and we already have a number of viewings booked.

“In our experience Chinese interest in London real estate has actually heightened in the last year. Buyers are looking to capitalise on the depreciation of sterling created as a result of Brexit uncertainty, and are increasingly focusing on long-term investment when it comes to purchasing. We find new build homes are particularly popular with Asian buyers as they offer the latest technology and require minimal upkeep.

“We are also finding Asian buyers are coming to the market very knowledgeable about the purchase they would like to make. A clear examples of this is the increasing popularity of boutique apartment schemes, like Adelphi Terrace located in the highly desirable Adelphi district below the Strand, which with only twelve apartments offers buyers a more unique product with less competition from the surrounding rental market.”

Property hunting is top of Chinese visitors’ itineraries when travelling to London

  • Claire Wu, Head of UK China desk at CBRE

“With many buyers interested in properties priced over £1m, Chinese clients would prefer to be shown the property in person, before making the final purchase decision. As a result, Golden Week is an important event for agents and developers, with property hunting top of Chinese visitors’ itineraries when travelling to London.

“We have definitely seen strong activity from Chinese buyers this year, though decision making time is longer due to the competitive projects on the market.

“Most buyers are typically investors, and therefore projects such as One Crown Place, Royal Wharf and White City Living have proven popular. Developments that are close to UCL and LSE have also been attractive due to their proximity to major higher education institutions, where many Chinese students come to study.

“Particularly popular areas this year are the City of London, White City, Fitzrovia and Canary Wharf.

“CBRE London’s China Desk usually speak to Chinese buyers in the UK (both residents and visitors). We also have teams in Shanghai, Beijing, Shenzhen and HK who work with local buyers.

“We work very closely with all the global teams, referring buyers to their local team based on their regions to make sure they receive excellent service without a time difference.”

We have done a handful of deals of real size and scale this year 

  • Guy Meacock, director of buying agency Prime Purchase

“We have done a handful of deals of real size and scale this year with clients who have established Hong Kong money behind them. Despite uncertainty here over Brexit, they have continued to be attracted to the London property market by the weakness of sterling and buying opportunities that have presented themselves.

“We haven’t seen so many mainland Chinese buyers, as they often buy at source from developers.”

Chinese buyers are increasingly prevalent in the Central London market

  • Oli Russell Head of Search & Acquisition at SP Property Group

“Chinese buyers are increasingly prevalent in the Central London property market. They are active at many price levels but to date, they are particularly focused on smaller one and two-bedroom new build investment properties.

“It is a generalisation, but the majority of Chinese buyers prefer new build properties as these have warranties associated with the construction and fixtures/fittings, providing comfort with their purchase,which they like.  There are many new developments popular with Chinese buyers. We have just concluded the purchase of a luxury one-bedroom property for a Chinese buyer at c.£1.2m in the Nova development, Westminster, close to Victoria station.

“I was also at the recent launch of Postmark, the old Royal Mail sorting office on Mount Pleasant, and there were many Chinese buyers, or their representatives, present at the launch.

“Developers are targeting the Chinese by tailoring their developments to accommodate them, for example, incorporating Feng Shui elements and not including numbers considered bad luck, such as the number 4.

“Conversely, we act for several Chinese landlords, managing their rental properties. Interestingly, a number of these investments buck the trend – for example one is a period house in Regent’s Park which needed refurbishing. We advised our landlord on the refurbishment and it rented within a week for more than £14,000 per month.”

We have seen significant increases of enquiries online

  • James Bailey, Chief Executive, Henry & James

“We have seen significant increases of enquiries online with regards to interest from the Far East for both lettings and sales.

“As trust is paramount for Chinese and Asian buyers alike it is where we have been recommended that is where we have seen the biggest interest.

“Having recently sold several properties in the North Belgravia area to both Hong Kong and Singaporean buyers who have purchased investments to rent out with a view to their children then using them at a later date when they come to the UK for further education. The price ranges they have been spending are between £1.5-2m.”

Buyers are willing to tolerate our ridiculous Stamp Duty taxes

  • Trevor Abrahmsohn, Glentree International

“We have presided over about £100m worth of sales now to Chinese nationals, made up of only five properties along the north west London corridor.

“Our experience is that they use top firms of solicitors and their due diligence is very thorough indeed. The problem for them, stems from getting money out of China.

“The first wave of these buyers wanted ready-made properties that were fully interior designed and needed only the buyer’s food and clothes to create a home. We call this instant gratification, where they can buy a piece of English heritage and live the dream in a matter of weeks.

“Subsequently, a number of Chinese buyers have bought parcels of land in order to build mansions for themselves, which is the polar opposite of the foregoing, where the gestation period from purchase to finished product, could be six years.

“They want to educate their children in this country and have grown up learning English as their second language, with all the joys of its literature and culture.

“In the main they are willing to tolerate our ridiculous Stamp Duty taxes since the combined effect of the drop of capital values of 25% and currency discount, is a very attractive allure for them.”

There was plenty of interest from Chinese buyers at the launch of the new Postmark scheme in Clerkenwell earlier this month