The number of investor visas granted to Chinese and Russians has soared in the year to September 30th, as more High Net Worths shift their investment focus to the UK economy, says Pinsent Masons, the international law firm.
Pinsent Masons explains that the number of investor visas issued to wealthy Chinese nationals has doubled in a year, from 178 to 357*. Chinese nationals now account for 43% of all investor visas issued by the UK in the last 12 months, the biggest share of any country, up from a 10% share just five years ago.
The UK Government has also increased the number of investor visas granted to Russian nationals, up by 57% in the last year, from 117 in 2013 to 184 this year.
Pinsent Masons explains that the increased interest in investing shown by international High Net Worths in the UK is indicative of the shift away from investment in some emerging markets, such as China, after a prolonged period of rapid growth.
Pinsent Masons explains that both Chinese and Russian nationals have been looking to reduce exposure to their domestic economies as those economies face a slowdown in growth– those investors are now looking for security by investing in lower risk assets in the UK.
Recent volatility in the rouble has illustrated the risks of being over exposed to one emerging markets currency.
Pinsent Masons says that the increase in visas issued to Chinese High Net Worths (HNW) is part of a broader increase in investment in the UK from China. Recent research commissioned by Pinsent Masons estimates that Chinese annual investment flow in the UK is set to rise to £30 billion p.a. in 2025. Over half of this investment will be directed at infrastructure and real estate**.
Yuri Botiuk, Partner at Pinsent Masons, says that he does not expect the new rules introduced last month by the Home Office to have a substantial impact on the UK’s ability to attract HNW investment as most investors applying for Tier 1 (Investor) status will see the doubling in the required investment from £1 million to £2 million as relatively modest.
Yuri Botiuk explains: “Whilst the economic outlook in Russia and China has shifted in the last year, this rebalancing of assets out of emerging markets and into the more traditionally secure UK market is more about good portfolio management.”
“HNWs in Russia and China are concerned about diversifying their investments.”
Jill Turner, Senior Associate at Pinsent Masons, continues: “Investors in UK assets are attracted by the country’s long history of secure private property rights. Strong codes of corporate governance in the UK also offer greater investor and creditor protection.”
“A lot of Chinese HNWs have had almost all their wealth linked to the fortunes of the Chinese economy. That has served them very well but with Chinese economic growth slowing after a tremendous run some HMWs are rebalancing their portfolios away from China.”
Yuri Botiuk continues: “Despite the Ukraine crisis, there has been a slight increase in the number of investor visas granted to Russian nationals since last year" and notes that "the recent decline in the oil price is so recent that it is not yet reflected in the number of visas granted.”
Investor visas to Chinese nationals have doubled in the last year
The number of investor visas granted to Russian nationals has increased by 57% in just one year
*Year end September 30th 2014.
** China Invests West: Can Chinese investment be a game-changer for UK infrastructure? Pinsent Masons and Centre for Economics and Business Research
For further information please contact:
Yuri Botiuk, Partner, +44 (0)20 7054 2683
Jill Turner, Senior Associate, +44 (0)1224 377 943