The UK is a popular place among Hong Kong investors and the historical background plays a critical role. Hong Kong used to be a British colony for a century, parents prefer sending their children to the UK for study and there was fear against the Chinese government are the three fundamental reasons. Do you know that UK is also a beloved country where 2.3 million of high-net-worth-individuals (HNWI) of a single country — that is 1/3 of Hong Kong’s population — park their money?
China’s huge Impact on the UK economy
It is reported that in 2013, UK was the most popular country in Europe for Chinese investors. By 2018, Chinese companies employed 62,000 people in the UK and this has made the UK the most common country for Chinese investment in both Europe and North America. In 2019, there were about 800 Chinese companies in the UK, employing 71,000 people, making an impressive £91 billion of revenue
On the property side, Chinese investment in London commercial real estate amounts to £2.69 billion, and a further £1 billion was pumped into this market in 2017. Overall, the total investment amount from Chinese investors has reached £8.63 billion in 2017. Even with the effect of Brexit and Covid-19, the increase in the investment amount in the UK property market has not slowed down a bit. What happened is quite the opposite: In July 2020, juwai.com (a Chinese international property portal) has recorded a 213% increase in enquiries for UK property.
UK property market fulfils Chinese buyers’ appetite
According to research by Junwai.com, there are four major criteria that Chinese HNWIs look for when investing in properties abroad:
No. 1 – They would like to educate their children overseas.
No. 2 – They buy international real estate for investment diversification.
No. 3 – They buy real estate abroad to live in.
No. 4 – They have either migrated or intend to.
So, does the UK meet the above criteria?
Well, it definitely does. Firstly, the US-China trade war has subtly made an impact on the investors’ appetite to invest in the US. This has led to investors looking for other countries to invest in. UK has then taken over the US and become the next popular destination.
Secondly, even if the primary purpose for property purchase being self-use and not to let it out, some people still choose to rent out the property while not living there. The rental yield in UK property is about 6-8%, which is considerably higher than 2-4% for properties in Shanghai.
Thirdly, the stamp duty holiday and the extension of it have resulted in increased buying interest. Under the current scheme which is valid until the end of June, first-time buyers do not have to pay stamp duty for property up to £500,000 in value. This would allow some people to save up to £15,000 in taxes when purchasing their first UK property.
The last reason has even made headlines in newspaper. In November 2020, over 7,000 Chinese students flown into Manchester on 31 specially chartered flights. Further arrangements will take place to ensure that the students can return to the UK when the semester starts in September again. This further reinforces the fact that the UK will continue to be one of the most popular destinations where Chinese parents would send their kids for education.
All of the above reasons support the booming trading and rental market in the UK. Even during the Covid pandemic, the UK property market has not shown signs of recession just yet. As long as you know where to invest in the UK market and how to identify a good deal, your profit is guaranteed for many years ahead.