The Chinese are coming but are you ready

At the end of the year we tend to take time to reflect on the year gone by. I think I can sum up this year as positive – personally and commercially. Gone are the days that people seem to refer to “then” in every other sentence and actually focus on the future. A future that is not risk adverse but sensible and a future that shows growing, learning to walk before it can run and being open to new ideas and new partners. For property to me a big thing this year has been the investment from the Chinese. Now let’s be clear, I like the investment not the human rights violations.

With Chinese developers becoming a prominent fixture in UK construction, and to be honest they are hear for at least the medium term, what do others need to do to compete? Probably the largest Chinese development is the £1.7bn London’s Royal Albert Docks scheme, developed by ABP and contractor being Citic Construction.

There are few things to consider on this:

• Let’s be honest, the UK is open for business with the Chinese, so it’s no surprise they are taking us up on the offer, particularly in the development market. The Chinese are only doing what other foreign investors are doing, partaking in an appealing market place.
• While we are in a period of austerity we need funding for our future projects, particularly the larger infrastructure projects, so why not seek support from overseas.
• More competition in a market place is good for the consumer provided the quality is there. The quality only time will tell, but competition am sure will come with other Chinese firms, particularly industry suppliers – bringing jobs to the UK. Products from China has historically been too costly but with the surplus, prices are cheaper which will help in an industry that has squeezed margins.
• Chinese developers don’t just use Chinese builders. Take the One Nine Elms development in Battersea where Dalian Wanda are using a Chinese builder in a joint venture with UK based Interserve – and why wouldn’t they form an alliance with local expertise! There are many more examples of jointly operating on UK soil. The bigger question is whether we will see an acquisition by a Chinese developer/builder on UK soil, that way securing a foothold on British soil.
• Do you think the UK planning process is straight forward for a Chinese developer? Ofcourse not, I imagine it’s like reading a foreign language – another opportunity therefore appears from UK firms to support on this front.

 

The future is bright and that may mean working with partners the industry is not use to. The Chinese are bringing opportunities, as are funds from Singapore, Qatar and other far away places. Use the local advantage you possess to work with these new partners and flourish. Have an amazing festive break and see you again the new year.

 

 

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

 

Enjoy the weekend

Lee