London still strong in Asia’s eyes

From sampling live sea slugs on my first night in Toyko with a Japanese life company and dodging Unzen earthquakes to rescuing my friend and colleague Robin Paterson from a revolving hotel door after the Hong Kong Sevens when he was the pushing one way and the All Blacks rugby team were pushing the other, it has been nothing but eventful.

I experienced the Japanese buying spree in London from 1987 to 1992 and their subsequent sales in the late 1990s and early 2000s. I’ve witnessed and welcomed constant interest and activity from Hong Kong investors. This started in the 1980s with corporate investments from the likes of the Cheung Kong Group, mainly in large residential schemes rather than commercial property, but went on to reach a wave of spending post 2016 as a combination of entrepreneurial flair and gamblers’ instinct kicked in, to take advantage of currency fluctuations post the Brexit referendum.

It was at this time, as well, that the Singaporeans really came in after tracking the UK market for decades, predominately in the form of government-backed organisations such as Temasek, GIC, CapitaLand and Keppel but also some private and nonetheless substantial investors such as Ho Bee.

I’ve seen the Taiwanese life insurance companies come and hold their investments in 2015-16 but little activity since, with names we never expected to be buying in the UK market such as Cathay Life and Fubon Life.

I’ve seen the Koreans as a mysterious force right up to 2012-13 when their first wave of investment came into the market. They stood back for a period of time because of negative currency issues but returned in a big way in 2018, making notable purchases of buildings such as One Poultry and 125 Shaftesbury Avenue, both of which are heavily reliant on the WeWork covenant. In terms of London, the ambitions of Korean investors such as Mirae are undoubted but I wonder if, at the present time, the equity is as interested as the asset managers.

Chinese investment

The Chinese of course have also been active investors, initially through their institutions at the beginning of the 2010s with the likes of Gingko Tree, CIC and HKMA, but since the onset of increased restrictions from their government, this has faded.

We also saw significant activity at this time from their life companies and insurers, the likes of Taikang, as well as investors that the Chinese government really wanted to control – investors that seemed to be buying everything, perhaps without enough regard for price, such as Dalian Wanda and Angbang Insurance. And don’t forget the Malaysians. How could we forget Battersea?

In all this time, though, perhaps the most telling moment came in September this year when I checked into my room on the 20th floor of a Hong Kong hotel in time to watch the riot police below, trying to control anti-government protesters who were ransacking the neighbouring Central Station.

Protests in Hong Kong are not unheard of, of course, particularly over the last decade, but given the scale of the current demonstrations and there being seemingly no end in sight, the global economic ramifications of ongoing unrest are difficult to quantify but need to be considered.

Without exception, the Hong Kong investors that I met in September were in a more conservative mood, shocked by what was going on in their own country, their own region. That hasn’t translated into a total loss of appetite, but their domestic scenario has unquestionably made them stand back to a degree and wait to see what happens at home, as well as abroad.

In line with most Asian investors, my Hong Kong contacts also shared their amazement at the UK’s Brexit crisis, the resultant uncertainty and their ultimate wariness about investing and perhaps overpaying in a market that may deteriorate.

So what does the future hold? Well undoubtedly Asian investors are here to stay and still believe in London’s pre-eminence as a gateway city. They still think of London as a very strong and safe centre and while we in the UK may be exhausted by the Brexit see-saw, their perception is more akin to a moderate swing in UK politics, which is attractive as it’s more moderate than other places.

To a degree, we are masters of our own destiny in terms of the way we go politically, and London remains strong enough in Asia’s eyes to ride out all but the worst scenarios from the forthcoming elections.

Rather like Middle East investment, I see Asian investment as maturing and becoming more steady and less spiky but still returning to previous levels within the next 12 months if, as most people in property hope, we move into a post-Brexit age.

John Slade is executive chairman of Evans Randall Investors