HK Developers Invest More In London Commercial Properties

HK Developers Invest More In London Commercial Properties Due To Higher Yields

UNITED KINGDOM – As more Hongkongers emigrate to the UK under the British National (Overseas) visa scheme, Hong Kong property developers are investing more in London commercial real estate thanks to their heftier yields, reported The South China Morning Post (SCMP) on Monday morning (7 February, SGT).

According to Kino Law, CEO and Chairman of Hong Kong-based real estate developer K&K Property Holdings, there in a surge of Hong Kong money flowing into the UK’s property markets over the past two years

He said this is probably due to London’s higher rental returns versus other gateway cities, and the relaxation of immigration policy for the holders of British National (Overseas) passports.

Other Hong Kong-based real estate developers that have entered London’s property market include Link REIT, CK Asset Holdings, Far East Consortium, Sun Hung Kai Properties, and New World Development.

Notably, K&K’s property portfolio in London’s West End is valued at roughly HK$4 billion (US$513.6 million), and Law revealed that it can potentially increase by around 50 percent in the next five years.

Recently, the developer acquired its 4th commercial property in Central London in the past two years, with the £66.1 million (HK$697 million) purchase of 15 Adam Street, an office building with a retail component.

Law disclosed that their London portfolio has an overall occupancy level of 93 percent, and most tenants are tech firms and global companies. At present, the portfolio contributes £17.3 million in rental income per annum, which works out to a yield of 4.6 percent.

Comparatively, commercial properties in major European cities have yields of between 3 percent and 3.5 percent, while those in Hong Kong and Singapore have yields of 2.5 to 3 percent, he noted.

Aside from that, Law pointed out that London’s West End has attracted a number of tech start-ups and established companies in recent years. For instance, search giant Google just acquired its 2nd headquarters there next to Endeavour House, which is owned by K&K.

He added that office leasing inquiries in West End have surged by 20 percent in the past 2 months, as the COVID situation becomes better.

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