China's Buying Spree in UK Property Market Rational?

　　Recently announced major Chinese investments in London are prompting more and more Chinese interest in potential investments in the UK capital. CRI's London correspondent Tu Yun has more.
 
　　Haidi Dai is a property market analyst 1 from Shanghai.
 
　　She's in London for a short business trip.
 
　　"The places I'd like to visit are mainly business and commercial areas like the City and Canary Wharf 2."
 
　　Dai's company has previously 3 helped with the planning of a finance and trade zone in Shanghai's Lujiaozui area, looking at Canary Wharf as a case of study.
 
　　"Shanghai is a global cosmopolitan 4 city, so we chose the finance districts of those cities like New York, Paris, London, and Tokyo as examples for research."
 
　　While some Chinese companies are studying from afar, some are coming straightforward 5 to tap into the local market.
 
　　Ping An Insurance Group has agreed to buy the landmark 6 Lloyd's building in the City of London for around 390-million US dollars.
 
　　Last month, Chinese property developer Dalian Wanda Group announced plans to invest some 1.5-billion dollars to buy a British yacht maker 7 and develop a five-star hotel in London.
 
　　And in May, Beijing-based developer Advanced Business Park signed a deal worth 1.5-billion dollars to transform the Royal Albert Dock in east London into a business port.
 
　　"London has demonstrated a very credible 8 growth even when the market was very tough over the last couple of years."
 
　　Ajay Bhalla is Professor of Global Innovation Management at Cass Business School with City University in London.
 
　　"It has outperformed most of the world property markets especially in the developing world. I think that confidence which London has built has become a very attractive proposition for Chinese and other investors 9. And the market's future outlook is to remain very buoyant."
 
　　A latest United Nations report shows foreign direct investment into Britain rose 22 percent to over 60-billion dollars last year.
 
　　That runs counter to the 18 percent decline in global FDI.
 
　　Haidi Dai says a comparatively high rate of return is the main factor driving Chinese investors to look abroad.
 
　　"Return on investment in China's property market is relatively 10 low at the moment. Take office buildings as an example. The ROI is only around 5 percent."
 
　　In comparison, the ROI from Pingan's acquisition of the Lloyd's building is estimated at 6-9%.
 
　　And with the UK economy still struggling, most politicians and business leaders in the UK are welcoming the potential for more Chinese investment.
 
　　Professor Bhalla says it's quite understandable.
 
　　"The investment in land often is a different intention. In these cases, all these investments which we've recently seen from China are the ones that are going to generate jobs, are the ones going to generate development of real estate, which means real money. And we've got to remember these investments often are long-term investments, and are passive investments, not active in interfering 11 in each other's affairs. And that's often welcomed by any advanced economy."
 
　　But given that China's economic growth has been showing signs of slowing down, some are cautioning that Chinese investment could quickly retreat, as Japanese investment did in the 1990s.
 
　　But Professor Bhalla notes Chinese investment is not nearly as deep as Japanese investment was some 20-years ago.
 
　　"I think the major worry I would say for the advanced economy or for the Chinese investors is how long do they see the investment. Is it just an attractive financial returns they are looking forward to making in three to five years or ten years. Or is it something that can be part of their long-term investment strategy."
 
　　For CRI, I'm Tu Yun in London.