London calling ... and responding

Updated: 2011-01-21 10:49

By Andrew Moody (China Daily European Weekly)

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 London calling ... and responding

Cici Dong says Chinese property buyers are looking for "trophy" second homes in central London or apartments for their children in university. Chen Siyu / for China Daily

UK real estate agent responds to rising demand with customized services

Cici Dong is on the frontline dealing with Chinese people wanting to buy London property.

The 25-year-old runs the new China Desk at international estate agent Savills' London headquarters in Berkeley Square.

The desk was launched in November in response to the rush of new Chinese buyers and is believed to be the only service of its kind being offered to those from China interested in UK residential property.

"We are actually very busy," says Dong. "We have had a lot of individual enquiries in London and lots of referrals from China, too.

"Of the transactions we have done, most are mainly business people who own their own businesses and we have also seen a lot of high net worth individuals working in the financial industries in China."

Savills has 22 offices on the Chinese mainland covering all the first-tier and major second-tier cities but although it has been marketing property in Singapore, Hong Kong, Canada and the United States for some time, it has begun focusing on London property over the past three or four months.

The agent held its first property roadshow dedicated to prime London property at the Park Hyatt Hotel in Shanghai on Jan 11 and 12, where there was also a lot of interest.

James Talbot, a director of Savills who attended the show, says China now provides a significant new customer base for London property.

"I think the fact we are out there is a barometer of the level of interest. I think 2011 will be something of a tipping point with more Chinese buyers beginning to looking to invest internationally in property.

"The Chinese government has been trying to take some of the heat out of the domestic property market (by raising interest rates) and in Hong Kong you have seen the imposition of 15 percent stamp duty if you sell your property within the first six months of buying it.

"People want somewhere secure to put their money into and the big international cities have that pull and London is right up there."

According to Savills' research, there has been a rising trend of buyers from China and the Asia-Pacific over the past two years.

In 2008, buyers of second-hand central London property from the Chinese mainland, Hong Kong and Singapore were near zero, compared to 6 percent in 2009 and 4 percent in 2010. Those from the mainland remained constant at 1 percent in both 2009 and 2010, whereas buyers from Hong Kong fell from 4 percent in 2009 to 2 percent in 2010.

Lucian Cook, director of residential research at Savills, says the statistics could significantly underplay the current involvement of the Chinese in the London property market.

"I think the figures are probably very conservative since they don't include new build property which, if anything, is even more attractive to your typical Hong Kong and mainland buyer.

"That the numbers from Hong Kong seem to have dipped in 2010 compared to 2009 seems to be just a natural fluctuation. I think the trend is certainly upwards."

Dong, who fronts the China Desk and is originally from Shanxi province, says Chinese people are a much more visible presence now in the United Kingdom generally.

She was sent by her parents to a boarding school near Brighton in West Sussex and then went on to read economics at the University of Bath.

"When I went to school, there were very few Chinese kids there but at university around a third of my class were Chinese," she says.

After graduating in 2007, Dong went to work in Shanghai for Savills, where she worked on international property exhibitions, before being posted back to London.

"I am here to cater for all the Chinese-speaking clients coming into London to invest. I am also the primary contact for all our Chinese offices," says Dong.

She says those coming over are often looking for "trophy" second homes in central London or apartments for their children at university.

"I would say providing accommodation for their children while they are students is around 60 to 70 percent of the market. They are not necessarily buying cheaper 250,000 pound (300,000 euros) to 300,000 pound properties but 1.5 million pound two-bedroom apartments in expensive areas like Knightsbridge," Talbot says.

 London calling ... and responding

"Very often, as always with the Chinese, it is a family decision. The kids have a look first and then the parents fly over and go through it all over again," he says.

Talbot adds the type of apartment can often be dictated by the gender of the child in question.

"Parents with boys often buy one-bedroom flats since they feel they are likely to have friends who will lead them astray. With daughters, they don't mind two-bedroom places since the daughter can share with a female friend and this could distract her from having a boyfriend move in," he says.

People from the Chinese mainland are restricted to taking $50,000 (37,643 euros) out of China in any one year, not enough for a deposit for even the cheapest property in London.

According to Dong, however, many mainlanders tend to have accounts in Hong Kong and other parts of the world from which they draw the cash for which to buy property.

"A lot of our clients have businesses in Hong Kong and have both business and personal accounts there and so they are buying property perfectly legally," she says.

Dong says the Chinese buyers tend to make their purchases using cash, although some do use mortgages.

"It is mostly cash funding. The only Chinese bank providing individual mortgage loans here is Bank of China. They have to open an account with the bank here since it is a different procedure to that in China," she adds.

She adds buyers coming over from China often need quite a lot of guidance since they are quite unfamiliar with how property is bought in the UK.

"They sometimes find the way it works here very strange and are not sure of the differences between freehold and leasehold and how the tax system operates. They also don't understand the buying process can sometimes take four or five months."


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