UK remains attractive to Chinese investors

By Katrin Büchenbacher Source:Global Times Published: 2017/6/19 17:28:39

Alistair Elliott, the group chairman of Knight Frank Photo: Courtesy of Knight Frank

The UK remains an ongoing attraction to overseas investors, a top UK real estate expert told the Global Times, despite the hesitancy around the snap election of Prime Minister Theresa May.

Business as usual

"The reactions of the market so far have been business as usual," said Alistair Elliott, the group chairman of Knight Frank, a leading global property consultancy with a strong presence in China, on Wednesday.

"The fundamentals of demand and supply are so far in favor of prices holding up that so far it would seem these changes have not created a substantial difference in fortunes," said Elliott, who has been working with Knight Frank, headquartered in London, since 1983.

On Friday, June 9, the leader of the Conservative Party, Theresa May, confirmed her position as Prime Minister of the UK with a snap election but paid for it with a failure to keep Conservative majority in Parliament for which she received vast criticism. During her electoral campaign, terrorist attacks hit London and Manchester.

"The world of terrorism, as we have seen in the last year, is everywhere," said Elliott. "I do not foresee any significant shift of investment or concern because of what has happened, whether it is in Shanghai, Paris or London."

Elliott admits concern about further hesitancy of foreign investors introduced by substantial changes in Theresa May's government, and if there is any suggestion of a move for different leadership or another election.

"Theresa May is saying she is going to stabilize things and continue her agenda; I think if that continues and is believed and understood, we will get back to normality again quite quickly," Elliott affirmed.

Brexit weakens pound

 After May lost parliamentary majority in a snap general election and with the Conservatives forming a minority government, a slightly weaker administration may favor a "soft" over a "hard" Brexit.

"The Brexit decision did not influence the housing markets at all," Elliott said, specifying, "There are some people who say a softer Brexit is better for the housing markets," Said Elliott.

"For many overseas home owners, Brexit created a 20 percent decrease in sterling overnight," Elliot added. "Currency looks like it will weaken further," he said.

Elliot believed that the weak currency might encourage overseas investors, who have not only invested in London but also increasingly in other regional cities since they have recovered from the global financial crisis thanks to government infrastructure investments.

However, if the pound suddenly strengthened, overseas investors would be pushed to more emerging markets, spreading risks further. "That means a lot more market research and understanding of the pitfalls and potential risks of those areas," he said.

Infrastructure is key

Regarding China's first-tier cities, Elliott believes that infrastructure improvements and improving the breadth of available residential housing options are more efficient than government policy intervention, with the aim to put a halt to rising property prices. "The cities that see significant growth in housing prices are those cities that are going through radical change," he said.

But Elliot did not speak of a bubble because of the rapid population growth in these key cities and the amount of capital available. Although he recommended caution for markets that have seen aggressive growth over the years, he is convinced that "Shanghai won't increase its residential real estate values by 30 percent every year indefinitely."

Elliott saw potential in the Belt and Road Initiative to redistribute hubs of wealth.

"But in doing so, one has to ensure there is a plan around housing and business premises," he added.


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