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Wurzel Of Highbridge

When Chineese Buyers Turn Into Sellers.

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It's quite obvious and well reported that the irrational exuberance in London is caused buy our asian friends buying up everything that is not nailed down.

So giving some thought to this:

When/why would these investors well?

Wouldn't you be better investing in your own country that is experiencing 7% growth than one with 0% (inflation adjusted)?

Are prices in China higher than London?

If the property bubble in China burst would there be a huge London sell off? If so would the Pound tank as investors exchanged their pounds back to Renminbi's?

http://www.zerohedge.com/news/2013-08-12/inside-chinas-real-estate-bubble

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Money laundering combined with a need for a bolt hole outside of China?

Lots of minor officials buying with millions of pounds.

Some countries give you residency rights for 'investing' in a country which can (in some) mean buying house/flat.

Any sniff of corrupt official being investigated, him and family will attempt to make their escapes separately.

Allegedly.

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If you don't think the money is going to keep it's value in local market - investing it overseas for rental in another currency may not be the worst hedge.

I suspect a lot of it is just a scam. Probably some wheeze to get low rate mortgages with a small deposit, all the risk is UK side, if market falls they can walk away - and an agency does all the paperwork, you just sign.

So invest £10K for £200 a month net rental income and maybe get a 100% asset gain in a few years, worst case lose your £10K. What's not to like.

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There are no property rights in China. The party rules supreme, 'ownership' of anything is at the whim of the Government, and the next time the balloon goes up (as it surely will) people who have done well since 1978 could stand to lose everything.

China loses 70% of the students who go abroad to study. Eventually if they do well enough they will bring their aged parents with them. That should tell you everything you need to know.

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If you don't think the money is going to keep it's value in local market - investing it overseas for rental in another currency may not be the worst hedge.

I suspect a lot of it is just a scam. Probably some wheeze to get low rate mortgages with a small deposit, all the risk is UK side, if market falls they can walk away - and an agency does all the paperwork, you just sign.

So invest £10K for £200 a month net rental income and maybe get a 100% asset gain in a few years, worst case lose your £10K. What's not to like.

So these Chinese buyers are all buying with mortgages from uk banks then with no practical recourse at all?

Edited by Si1

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There are no property rights in China. The party rules supreme, 'ownership' of anything is at the whim of the Government, and the next time the balloon goes up (as it surely will) people who have done well since 1978 could stand to lose everything.

China loses 70% of the students who go abroad to study. Eventually if they do well enough they will bring their aged parents with them. That should tell you everything you need to know.

What about all these apartments Chinese investors have been buying up in China? Some kind of leasehold?

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There are no property rights in China. The party rules supreme, 'ownership' of anything is at the whim of the Government, and the next time the balloon goes up (as it surely will) people who have done well since 1978 could stand to lose everything.

China loses 70% of the students who go abroad to study. Eventually if they do well enough they will bring their aged parents with them. That should tell you everything you need to know.

Guess they mostly go to america, canada australia. Despite the boom in chinese students here, the census results tend to show the chinese have been one of the slowest growing minority groups in the UK between 1991 and 2011.

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There are no property rights in China. The party rules supreme, 'ownership' of anything is at the whim of the Government, and the next time the balloon goes up (as it surely will) people who have done well since 1978 could stand to lose everything.

China loses 70% of the students who go abroad to study. Eventually if they do well enough they will bring their aged parents with them. That should tell you everything you need to know.

Widespread rights to residential property title only became law in 2007 ... while theoretically this covers people, in reality the Communitst Party is above the law and there's little faith that property (or anything else for that matter) can't be confiscated. Most business premises are in short term leases - you can spend a packet creating a business only to have it taken away on the whim of a local official. (This applies to locals and foreigners alike).

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What about all these apartments Chinese investors have been buying up in China? Some kind of leasehold?

Exactly, there are entire ghost cities in china owned by Chinese investors. With growth coming in at 7% (allegedly) wouldn't you be better off investing in Chinese property?

As for the land ownership thing:

Ownership rights are protected under Article 39 of The Property Law of the People’s Republic of China, which gives the owner the right to possess, utilize, dispose of and obtain profits from the real property. However, this right has to comply with laws and social morality. It can harm neither public interests nor the legitimate rights and interests of others.[8]

In general, rural collectives own agricultural land and the state owns urban land. However, Article 70 of the The Property Law allows for ownership of exclusive parts within an apartment building, which endorses the individual ownership of apartments.

Land for residential purposes 70 years

http://www.worldlawdirect.com/article/3149/property-rights-china-new-property-law-2007.html

Article 149 stipulates that the term of residential land use rights upon expiry of 70 years shall be renewable automatically and the renewal of the term of non-residential land will be arranged according to the relevant laws and regulations. The ownership of the buildings and other immovable properties erected thereon shall be governed by the agreement, if any, among the parties concerned. If there is no agreement or the agreement is uncertain, the ownership issue will be dealt with based on the relevant PRC laws and regulations. The new law does not change the system of land tenure and the state still owns all land.

But, is it really any differnet from the UK where the the Crown owns all land. A deed gives an "owner" reasonably exclusive rights, mostly to access and so on. This "right" can be bought and sold.

If it is that bigger difference, could a small change to Chinese law upset the London property fantasy?

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Gone to Ireland:

But, is it really any differnet from the UK where the the Crown owns all land. A deed gives an "owner" reasonably exclusive rights, mostly to access and so on. This "right" can be bought and sold.

If it is that bigger difference, could a small change to Chinese law upset the London property fantasy?

Er YES - I remember one case where an Australian businessman lost his entire fortune and was imprisoned because he wouldn't hand over ownership to relatives of senior party officials. I don;t recall anything like that in the UK for about 300 years.

I'll say it again - any Asian (not just Chinese) with an ounce of wealth will put it into UK property and happily accept 60% loss in nominal, as opposed to a possible 100% loss to their own government. And thats not just the corrupt ones looking to hide from justice.

If the Uk gvt had any brains and/or morals (which they do not) they would slap a 100% supertax on purchases by non-british residents and non-british based corporations. They won't thought.

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Money laundering combined with a need for a bolt hole outside of China?

This.

I remember reading that there are places in the states where you can find perfect nuclear families of Chinese consisting of the nice home, the wife, two kids- meanwhile dad's still back in China making hay while the sun shines but ready to leave at short notice and join the family in the west if/when the shite hits the fan.

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