Mayer Brown acts for more than 40 Asian investors on their UK acquisitions and we are now commonly being asked whether this wave of Asian investment is slowing down and/or coming to an end. The answer is that it depends upon the type of Asian investor and it is a mistake to generalise; after all we wouldn’t expect all European investors to behave in the same way. We have seen many different types of Asian investors and they all have different challenges, sources of capital and investment criteria.
We have certainly observed a significant fall in the level of investment from mainland Chinese buyers and this is largely a result of the Chinese government’s capital controls. There have been some recent relaxations of these regulations, but we are not seeing (or expecting to see) any significant increase in investment from the mainland Chinese buyers this year. This is politically driven.
Following the Brexit vote in June 2016, we saw a significant increase in investment from Hong Kong based buyers (who are not caught by the capital controls) – these have primarily been high net worth individuals, family offices and the listed companies controlled by the wealthy families (i.e. private money). These investors have taken advantage of the weak pound and comparatively attractive yields, but have confidence in the long term health of the UK economy. We have found that some of the more established and well known Hong Kong investors have begun to show caution, but we are continuing to see new entrants and many of these are diversifying their wealth from other industries.
Finally, although the Chinese buyers have become less active, the Singaporean and Korean investors have filled the gap and increased their activity in Q1 and Q2 this year and so the pool of potential purchasers is as wide as ever. There are still dozens of Asian investors looking to invest, but they complain that there is little stock available.
Chris Harvey, head of UK real estate at Mayer Brown