Real estate spending spree in UK will create jobs

Major Chinese deals in 2013 included the sale of the landmark Lloyds building to Ping An Insurance (Group) Co of China Ltd for 261 million pounds, the significant investment in development sites such as the Royal Albert Dock, which will be developed by Chinese Advanced Business Park Holdings Group, and the Crystal Palace Park, which will be regenerated by Chinese real estate giant Zhongrong Group. Dalian Wanda closed two deals in last June, investing 700 million pounds to build a five-star hotel by the River Thames and buying a 92 percent share of Sunseeker Yachts for 320 million pounds.

There have been reports that China's sovereign wealth fund, China Investment Corp, has been negotiating with US private equity group Blackstone Group LP to take over a commercial park in London. The deal is reportedly worth $1.28 billion.

China has shown consistent economic growth, escaping the downturn afflicting so many other countries. As a result, big Chinese companies have the buying power to go abroad and seek globalized development.

Jon Neale, head of UK research at Jones Lang LaSalle, says China's pace of economic development, while slower than over the past decade, is still unparalleled in human history.

"Greenland has investments in almost all Chinese cities, so globalization is a necessary choice for big companies like us," says Zhang Yuliang, chairman and president of Greenland Group.

"We have had brand influence, and want to participate in global competition."

The many Chinese companies, businessmen and students who go abroad have also given Chinese real estate developers enough confidence to undertake their own overseas gold rush. Most Chinese real estate enterprises that have entered the overseas market have gone to countries where there are many Chinese companies and residents, such as the United States, Canada and Britain.

"As more Chinese companies, students and visitors go abroad, we also need to promote our overseas development," Zhang says. "Powerful companies should get a foothold in overseas markets."

ABP (China) Holding Group Chairman Xu Weiping also says his business park projects are aimed at Chinese and Asian companies.

Some experts note that Chinese developers are looking to seek more opportunities and diversify their portfolios beyond the domestic and Asian markets.

The London property market is moving ahead of the overall UK property market, at both the top and bottom ends. It is seen as an indicator of short- to medium-term performance across the whole market. Because of active trading in London real estate over the past two years, Zhang says, the average residential price rose by 10 percent last year. Demand is expected to rise this year.

East London and the Thames docklands are seen as particularly attractive because of their development potential and proximity to the financial centers of the City of London and Canary Wharf, home to several big companies and modern housing alongside the Thames. The successful 2012 Olympics acted as a showcase for regeneration in the area.

"London has always been a sector that attracted a lot of overseas investment, whether it was from the Middle East, the US, Canada or from all around Europe. Chinese investment is welcome," says Dean Hodcroft, head of real estate at Ernst & Young LLP.

Chinese investment heading to London is on an unprecedented scale and experts say it will have a dramatic effect on the country as the cash cascades through the economy. Not only will it attract billions of pounds of capital into the Britain's financial services industry, but it will also create tens of thousands of jobs.

"For us, Chinese investment is important," says Edward Lister, London's deputy mayor. He has made extensive trips to China over the past year, with the aim of encouraging more firms to invest in the city. Hodcroft noted that the investments by the Chinese will be ultimately successful.