China Pours Billions into London Real Estate

The Chinese company Greenland International is pouring billions into London real estate. The Shanghai-based company announced plans to invest 1.2 billion pounds into two overseas projects in London on January 7. The project will be an excellent chance for them to increase their global development. China is one of few Countries that have shown consistent economic growth throughout the last decade, despite the financial crisis of 2008. Chinese Companies now have the buying power to go abroad and secure investment around the world. The large number of Chinese companies overseas, along with students in other countries has also given them the confidence to take action. The UK's relatively stable economy, political system and a high level of legal transparency means that London is a wise choice for investment. East London and the Thames docklands are both internationally renowned because of their close proximity to Canary Wharf, London's main financial center. Alex Witt is an investment analyst at Goldman Sachs and Business Founder of the New York Dream real estate company. He talked about the reasons why London is a prime location for property investment. "London first of is an international market place with global supply and demand. There is actually only handful of global markets in the world which include London, New York and to a lesser extent Hong Kong and Singapore. One of the main appeals of London is its global demand and as a result it doesn't fluctuate as much because of the domestic economy. London and New York, because of that global demand, tend to be more stable real estate markets which make them good stores of value. From the perspective of an investor, investing in a global real estate market like London secures a stable source of value. The other thing to consider is the local Chinese markets like Beijing and Shanghai, there are limits of the number apartments that locals can buy, as a result they want to move their money elsewhere as they can't invest in the local real estate essentially. Furthermore many Chinese feel they have limited investment opportunities. This means many people look abroad to invest their money and London is a good stable source of investment." According to Nation Wide Building Society the price of the average home in the UK? increased 15 percent from 2012 to 2013. Future rise in property prices could mean that Chinese Investors also stand to make a significant profit from these ventures. The deal will also be very beneficial for the United Kingdom. Investment of this scale will give a needed boost of both business and consumer expenditure. It will also create a lot of jobs and assist in reducing the rate of unemployment. This will go a long way to strengthening the UK's economy after the 2008 financial recession. Alex Witt also discussed several costs and benefits of this venture for both Greenland International and the United Kingdom's Economy. "So from the investors stand point it is a very good store of value, because of the international demand the chance that their investment will decrease in value is relatively limited. From a cost perspective they are paying premium prices for central London real estate. From the UK's government perspective they are really encouraging foreign investment and for good reason. I think Chinese Foreign investment will bring new commerce and new job opportunities to the British economy. Basically Chinese investment creates demand for British labor, British resources and that causes a stimulus for the local economy. I see it being a benefit for both ends and that is probably why the UK government is being so encouraging of foreign investment." Last December research statistics from Jones Lang Lasalle Inc showed that Chinese investment has risen 1,500 percent since 2010. Total Chinese input in London real estate was estimated at 1 billion pounds at the third quarter of 2013. It now equates for more than 50% of the total investment by China in Europe. Previous Major investments by China in London include the sale of the landmark Lloyd's building to Ping An insurance (Group) Co of China Ltd for 261 million pounds. The development of the Royal Albert Dock will also be developed by Chinese Advanced Business Park Holding Group Co Ltd. Furthermore Dalian Wanda Group also closed an ambitious deal last June pumping 700 million pounds to build a five-star hotel by the river Thames. An increased level of investment does however often tie in with increased inflation rates. This will mean that future foreign Investors will have to be aware of the possibility of the UK adjusting interest rates to combat inflationary pressure. Greenland International investment is however a wise move on their behalf and should prove to be both beneficial for them and the United Kingdom's economy. Only time will tell how big the fruits of this transaction will be.