Despite recent news that the Chinese see UK commercial property as a ‘safe haven’, recent changes have played a part in the fall in demand.
Bob Sturges, Head of PR & Communications at Fortwell Capital stated: "As a lender with an abiding interest in prime central London (PCL), we have recently seen some softening in demand from Chinese investors.
“The reasons are several and include: higher entry costs due the recent depreciation of the Chinese currency; changes to stamp duty charges; unrealistic valuations for some PCL property, particularly large single-unit developments; and concerns regarding a possible Brexit.”
The new 3% stamp duty surcharge on the purchase of additional residential properties will apply to foreign buyers and non-domestic buyers, as well as UK residents.
James Bloom, Chief Executive of Regentsmead, also felt that the top end of the market in central London had been slowing down during the last year.
“The heat has already come out of this part of the market.
“The stamp duty and tax treatment changes will only make this worse and I believe we have seen a 10%+ correction in central London already.”
James felt the big question was whether it would filter out to the wider market.
“Depending on the Brexit outcome we could see a correction in the market caused by a loss of confidence, uncertainty, a run on the pound and increasing interest rates.
“This is probably more concerning for the market.”
However, despite Bob reporting a lull in Chinese investment, he felt the hype and doom-mongering had been overdone as the fall in the value of sterling had actually helped make London more attractive to overseas investors.
“Developers and sellers are responding to a softening in demand by pricing units more sensibly.
“Moreover, there is strong anecdotal evidence to suggest that Chinese buyers are transferring wealth from their homeland to western safe havens - and they don't come much safer than London - arguably the world's unofficial capital.”
Bob highlighted a post in The South China Morning Post, a key opinion former for the Hong Kong elite which stated: "London property offers something for every [Chinese] investor's strategy and risk appetite."
Bob concluded: “Who are we to argue, and one might reasonably conclude that what's good for the Chinese is good for wealthy overseas investors elsewhere?”
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