The significance of the UK market for Hong Kong and Hong Kong-based commercial investors cannot be understated. It consistently ranked their top outbound capital destination from 2015 to 2018. Important purchases by Hong Kong funds of trophy assets include landmarks such as the 20 Fenchurch Street (the Walkie Talkie), 20 Moorgate, the UBS Headquarters, and 30 Gresham Street.
However, the UK commercial investment volume this year reached just US$1.5 billion, down from last year’s US$3.1 billion. UK’s ranking significantly slipped to fifth position for Hong Kong investors.
Two main factors are at play. Firstly, the uncertainty caused by the intense UK political maneuvering during the year is definitely one of the main reasons why supply is sluggish. UK landlords were reluctant to sell causing a shortage of investible properties in the market. Available stock level in central London is at record low. Secondly, on the demand side, some investors waited in the wings wanting more Brexit certainty. Today’s election results have given the investment community the certainty that they were looking for.
London not only presents a long-term stability, but the investment yield is also among the highest in major financial hubs particularly when compared with other European capitals.
Paul Hart, Executive Director, Greater China, Head of Commercial says, “Now with the lifting of the political fog, London looks like an exceptional buy, particularly when compared with the likes of Paris, Milan and Berlin. London’s appeal, in terms of investment return, will definitely draw out Hong Kong investors in 2020.”