Hong Kong and Chinese investors still buying – how to engage with them

13 November 2020 | Investment

Sally Maier-Yip, managing director of 11K Consulting, the UK’s leading China PR and comms agency, outlines why buyers from Hong Kong and China are still interested in UK property even in challenging times – and how they can be effectively targeted.

As a Hong Konger who has lived in London over the past decade, I am often asked by my friends and relatives in Hong Kong about life in the UK these days. Some of the common questions are: “Which part of London is safe and good to live?”, “Which areas are good for schools?”, and “What clothes should I wear in the UK?”.

Despite the ongoing Covid-19 pandemic, Brexit, and the global economic recession we are facing, I am cautiously optimistic and confident to say that these external factors have not stopped and will not stop Hong Kong and Chinese high-net-worth-individuals (HNWIs) and investors to continue to buy either residential or commercial property developments in the UK, especially in London (for both residential and commercial) and Manchester (for residential), in the New Year ahead.

This is not because I am biased; but this is based on the recent insider insights I got from various leading China/Hong Kong-focused immigration, investors association, property agency, and education consultancy industry experts in the UK, Hong Kong and China. These experts all work closely with their Chinese or Hong Kong HNW clients; and all of them comment that their clients remain largely confident in the UK luxury property market in 2021.

Here are three top reasons:

The weaker pound  

In actual fact, properties in the UK are cheaper than before for Hong Kong/Chinese buyers due to the weaker pound. Last year, the exchange rate between the Pound and Chinese Yuan was around 1 to 9. This year it has been around 1 to 8.7 or even 8.6.

That means now is a good opportunity for institutional investors (i.e. funds, family offices and wealth management companies) to look for good bargains. Their thinking is that “if you cannot finish to complete the building, we can come in and buy with cash.” They are here for long-term returns on investment and they are still largely confident about the prospects of the UK property market in the next five or 10 years, despite the short-term disruptions and uncertainties.   

On the other hand, quite a few property developers in the UK are struggling to sell their properties to the local market; and they still need to pay back their loans. Consequently, they are giving more incentives to Chinese or foreign buyers to buy, such as paying for buyers’ stamp duty for up to two years and giving away furniture for “free”.

Also, a Chinese property solicitor pointed out that in China, buyers can only get 1 to 2% yields for their luxury properties. But in the UK, at the same property price, they can get 4 to 6% yields.

Education, education, education

Affluent Chinese parents are increasingly considering sending their children to study in the UK in the coming years as opposed to the USA, Australia or New Zealand, due to the recent hostile relationship between China and USA; and Australia.

These wealthy Chinese families usually invest in education early, even though they may not be familiar with the UK itself and the weather. And property is always in their blood. Property is something tangible. Something they can feel.

They can do their own desk research. They can keep it for themselves and pass it to their children. Their thinking is that they buy a property for their children to live in for three years during their academic term in the UK, and after that, they own the property. So that’s a good deal.   

During Covid-19, some Chinese students were stuck in the UK and couldn’t go back to China for various reasons. As a result, their parents have been buying them a studio flat or even a two-bedroom flat to stay safe in London.

UK’s citizenship offer for Hong Kong’s BNO holders    

Almost three million HK BNO (British National Overseas) passport holders will be able to start on a path to British citizenship from January 2021, for five years, which will inevitably drive the UK property market in some ways.

Personally, I have already had a few Hong Kong wealthy friends doing their “site visit” in London and Manchester since August, evaluating the option of relocating to London or Manchester in early 2021. They do not like to rent and are actively looking to buy an apartment or a house for their families, and/or for their own investment.

Overall, Hong Kong and Chinese buyers perceive the UK property market as a safe haven, and take a long-term view when they make a property investment in the UK. The future is quite bright. 

So, the next frequently asked question is: what are the first steps to start engaging with these Hong Kong and Chinese buyers?

Connecting with UK-based intermediates

First, I want to say that Chinese/Hong Kong people are not scary. We are quite friendly people. You don’t need to speak Chinese to work with Chinese/Hong Kong people. But the key and the first step to start engaging with the end-buyers is to work with those UK-based Chinese people who are already resourceful and well connected with the end-clients in the UK or China/Hong Kong. 

This will help you win quicker and easier. Build relationships with these intermediates first before going to China/Hong Kong direct.

Invest in building long-term trust

Invest time in learning more about Chinese culture and ways of thinking and working. For Chinese people, business is based on genuine friendship that is built over time as opposed to one-off, transactional relationships in the Western business world. 

That means you may need to give away quite a lot of time and do many favours at the beginning of a relationship. You will need to show what you can do and prove yourself first. But once you get the trust from the Chinese clients or counterparts, you will be sure to get your money back later, for a long time.

Building your trusting reputation

Chinese buyers like to be informed constantly and value trust hugely. So, make sure that you have a good presence and image on the right Chinese media platforms to build your trusted reputation and thought leadership positioning among your potential customers.

There are different ways of doing it: from talking to the right Chinese press, speaking to or showing up at the right conferences and events, to having the right quality Chinese marketing materials and posting regular, relevant content on WeChat. The tactics vary depend on your target audiences.

These are some of the basic steps to start with; but they will help you get started and win the Chinese market in the long- term.  

*Sally Maier-Yip is the managing director of China/UK PR agency 11K Consulting 

This post has originally been featured in Property Investor Today.