Chinese and Koreans Keep EU Property Afloat

We are told that the Chinese do not have any money left, that the coffers are empty and that they will have to go the same way as the US and start printing presses rolling along so that the banks end up flush again and the economy rebounds. But according to new studies that have been carried out in the property sector, it’s the Chinese and the South Koreans that are keeping the commercial property sector alive in the EU at the moment and nobody else. For people who don’t have money and whose economy is apparently ready to take a nosedive in the next few months and drag us all down with them, they don’t seem to have too many problems. At least, they don’t have as many problems as we would perhaps sometimes like to think.

Flag of the People's Republic of China

Flag of the People's Republic of China

Asia-Pacific investors account for almost half of the commercial-property sector cash inflows in the EU today, amounting to $5.6 billion. There has been an 18%-increase in the net capital inflows when comparing the first half year of 2013 and the first half year of 2012 ($12 billion). The South Koreans and the Chinese are therefore pushing the growth of property in the EU forward and it’s not just commercial property, but also residential-property prices in the EU.

South Korea

South Korea

Residential-property prices in France have increased by 75.3% over the past decade. For the UK that increase for the same period stands at 68.74%. Belgium has seen its prices increase by 125.48% in ten years.

While the EU-27 and the Eurozone have gone from crisis to crises, buffeted from one economy failing to another country that needs to be bailed out, juggernauted into rising rates of unemployment that have never been worse along with credit cuts and loan crunches, the Chinese and the South Koreans have been the optimistic ones in the EU. They have been investing in commercial and residential property accounting for half of the capital spent in that sector entering the EU.

Real-estate purchases in three primary locations in the EU were the object of the desires of the Chinese and the South Koreans. They were the UK, France and then Germany. London was the city that attracted the most attention out of all. Once, the Chinese would have bought in Hong Kong, but today the EU is a much more likely place of finding a bargain. Overseas purchasers spent $3.4 billion in London alone on property in 2012 and that was only for property that was newly commissioned.

Lloyds of London The Inside Out Building

Lloyds of London The Inside Out Building

Earlier last month (July 9th), Ping An, the Chinese insurance company, bought the Lloyds of London building for $393.5 million (£260 million). The well-known landmark is on lease to Lloyds until 2031 and this purchase is believed to be the starting gun for the race to buy buildings and commercial property in London by the Chinese today.

Whatever happens, once London has been bought out lock stock and barrel, then other cities will see the Chinese and the South Koreans moving into to buy up the commercial buildings. Not only will the Chinese own the world economy (if they don’t already) soon, but they will also own the buildings in which the economic decisions will be made.

Jones Lang LaSalle, the property-services company and market-research service carried out the study. They are located in Paris, Lyon and Marseille, France.
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