What is the top UK market trend from an Asian investment viewpoint?

Wealthy Chinese investors have long been reliable investors in the market, and have frequently looked to the UK, specifically London, as a stable and reliable point for investment.

Twice as many homes were sold in Central London for more than £15 million in 2021 as in 2020, the latest figures revealed, and it is anticipated that Russian and Chinese buyers will lead the way in the capital in 2022. But, from a Chinese and Asian investment perspective, what is set to be the number one trend in the UK residential property market in 2022?

In a thought leadership article collated by 11K Consulting, a leading UK-based China-focused property PR agency, predictions have been made by eight China/Asian respected industry experts across the tax, legal, immigration, wealth management and property sales sectors. The main findings are below.

Education, education, education

It is predicted that in the aftermath of the pandemic, education will remain a key driver for Chinese and Asian buyers of UK residential property. Security is also becoming a priority, and there will be a continued increased use of digital tools for property viewing with the ongoing global travel restrictions caused by Covid.

Rafael Steinmetz Leffa, executive director of GWM, said: “From clients based in mainland China, the main trend I have witnessed is an actual willingness to move to the UK. There has been an educational reform causing challenges in obtaining private tutoring or access to international schools. This reform is causing a lot of investors to consider moving to the UK which is known for its education.” He added: “I have also witnessed an increase in the demand for financing products for investments made in real estate by these investors. This increased need for mortgages and other forms of lending is certainly becoming more prominent amongst buyers who in the past would quite often disclose and promote the fact they paid in cash. This, in turn, changes the general habit of these investors.”

Catharine Che, director, head of Asia department at Sotheby’s Realty, said: “The number one trend would be increasing investment with [a] budget around £500,000. Target cities are London, Birmingham, Manchester, Oxford, Cambridge and York. In terms of home relocation, the budget would be around £5 to £10 million. Target houses located in London and London suburbs with good living environment and great schools.”

Joanne Chung, senior immigration solicitor at Woodcock Law & Notary Public, said: “We have seen many overseas buyers interested in new build properties, although there is a growing number of sourcing agents that offer a full project managed refurbishment service including HMOs. We continue to see steady growth in instructions, although numbers have reduced since the end of the stamp duty holiday.” She added: “We expect demand from Asian investors for UK property to continue to run strong into 2022, as the shortage of homes remains a serious problem for the UK housing market. Young professionals are likely to look for rentals, which highlights a great potential for rental investment returns in major cities. We believe rental prices will grow even stronger as the UK market continues to grow alongside increased demand.”

Dr. Ian Zhu, head of China outbound investment – China Britain Services Group, Grant Thornton UK LLP, said: “My observation is the security became one of the major concerns. Some new buyers dare not to live in the house because they feel that the windows and doors can be easily broken into while high-security apartments the visitors have to go through various security checks.” He went on: “Another trend for buy-to-let is that luxurious apartments are very popular with Chinese students whose parents are very supportive to let them stay in a two- or three-bedrooms apartment without sharing with others because of concerns regarding Covid-19 and offering enough space in case of another lockdown.”

Steven Landes, managing director of Hawksford, said: “The number one trend will be increasing competition from local buyers for the new UK properties that buyers from the Chinese/Asia markets tend to favour. This increasing competition is coming at a time when labour and material supply problems caused by Brexit and Covid have delayed many new developments restricting the supply of new properties. He continued: “At the same time local buyers from the UK are seeing rock bottom interest rates making mortgages even more affordable for those whose incomes have been unaffected by Covid. This has little effect on Chinese/Asia investors investing in the UK residential property market as they tend to be cash buyers.”

Searching and comparing

Amy Hon, senior partner – strategy at New Vision, said: “We expect the demand of the Chinese market on UK property investment and overseas investment will become more complicated in the year ahead, meaning Chinese clients will expect higher standard service from a specialist organisation.” She added: “Having dealt with many Chinese clients, we have observed a noticeable trend. Clients used to query on a few properties, but they have become more eager to search and compare a wide range of properties nowadays. As an organisation providing service for buyers, our solid
relationships with major developers and leading estate agents in the market allows us to provide a wide range of options and the most suitable and optimal solutions for our clients.
She continued: “Multiple property options, remote viewings, professional analysis reports and overall comprehensive planning from a specialist organisation like New Vision are the advantages that clients will benefit from to make a sensible and realistic investment decision even without a physical property viewing.”

Caryn (Shu Hui) Toh, associate solicitor at Ronald Fletcher Baker, commented: “Investing in digital marketing, high quality photographs, virtual tours and short film of the neighbourhood for example can enable buyers to have a true sense of where they will be living. The photographs would be targeted to the consumers’ appetite and the idea is that this will positively help them in their decision-making. “Online platforms will also play a huge part in changing how investors, buyers and sellers navigate the residential property market and businesses.

Gone are the days where you have to be ‘local’ to purchase properties. Of course, not forgetting that building relationships is still important.” Lastly, Parikshat Chawla, director of industry relations at Pacaso, said: “The biggest trend I’ve noticed recently is the inclusion of shared workspaces in new developments – both apartment and villa projects. With the work from home movement now becoming the norm, many homeowners and renters still prefer to get out of the house to get some work done or make their Zoom calls etc. in privacy. These shared workspaces are an absolute boon for anyone in such a situation.”