Chinese banks set to take up to 2m sq. ft of commercial property in London

Bank of China HQ, London

Bank of China HQ, London

According to a new report from commercial property consultancy Savills, the global expansion of Chinese financial institutions may see them take up as much as 2 million sq. ft. in the City of London over the next decade. The report claims that Chinese firms see London as one of the key centres for global finance and will take up the opportunities offered by setting London as a base as part of a $1 trillion investment in the West over the next seven years. With four in ten of the World’s largest banks now Chinese, and the sector expanding rapidly since the 2008 downturn, the investment will not only change the structure of the City but also consolidate its position as a global financial centre.

Europe was the recipient of a third of Chinese foreign investment in the past year and so it’s unsurprising that so many Chinese firms focus on the UK as a base. According to the Heritage Foundation, there has been a surge of trade between the two countries in recent years. China has invested some $8.5 billion in the UK over the last two years while British exports to China have doubled to £15.9 billion over the past five years.

While Chinese banks have expressed their discontent at the rules brought in to regulate banks in the wake of the 2008 crisis, Chancellor George Osborne recently visited China and in October announced plans to deregulate in some areas, including by allowing Chinese banks to open wholesale branches in the UK.

According to the Savills report, Chinese banks have had a limited impact on the London commercial property market  but that is all set to change on the next few years. It claims that while Chinese financial institutions now have a track record of paying over the odds to secure the right property, they know what they like, preferring new or extensively refurbished offices in central locations.