“I’m commercial property’s Brad Pitt,” said Ronnie Chan, chairman of Hang Lung Properties (China’s Land Securities). Chan’s barnstorming speech perfectly captured the bullish mood at MIPIM Asia.
Even the food was confident at the conference held at the Grand Hyatt hotel in Hong Kong on 1-2 December. Cardboard chicken and cold vegetables haunt UK conferences, but the Chinese love their food even more than the French.
Take the genius dessert at MIPIM’s gala dinner, for example. It made Heston Blumenthal look like a dinner lady. A bell jar arrived. Inside – dry ice white clouds. The waiter lifted it: a dark chocolate globe blazed with gold leaf. Next he poured hot chocolate sauce – dissolving the ball and revealing raspberries and milk chocolate ganache. You don’t need any numbers to know this is a bull property market.
Former Chinese leader Deng Xiaoping said China should “hide its capabilities and bide its time”. Well, it’s not hiding anymore. China’s property schemes and businesses dominated this MIPIM.
Their self-confidence is understandable. China has pulled off one of the greatest economic miracles in history. The economy has grown fourteenfold in 26 years. Never have so many people become better off so quickly.
In 2008, 84% of Chinese people polled hailed this huge economic achievement. The popularity of the managed market economy (or “socialism with Chinese characteristics”) makes growth Beijing’s holy grail.
So when the Lehman crash hit in 2008, the Chinese government responded with a massive pulse of credit-fuelled investment.
The price? Debt ballooned to 250% of GDP. But growth surged to 10% pa. China powered the crisis-ridden world economy.
The result at home was a loose interest rate market and low-yielding government bonds. Chinese real estate companies and institutions needed better returns.
Encouraged by the Chinese government, they turned to “alternatives”: private equity, hedge funds and overseas real estate.
They’ve done it with aplomb and even a dry sense of humour. The moment the regulations changed, Chinese insurer Ping An bought Lloyd’s of London’s iconic headquarters. At MIPIM, Ping An made it clear that it would be making more purchases in the UK. It is allowed to invest 30% into real estate, so it still has massive headroom. Its team had been to London three times in the past six weeks.
The Chinese investment revolution in UK real estate continues. Powered by China’s vast surpluses and growth policies, it will be a fixture in our market for years to come.
Bruce Dear is head of London real estate at Eversheds
