Hong Kong billionaire, Cheung Yu-tung, and two other Hong Kong investors, Cheng’s Chow Tai Fook Enterprises Ltd developer Sammy Lee, and businessman Peter Fung, have spent £30 million gaining 61% of Pinnacle Regeneration Group Limited.
Pinnacle Regeneration Group Limited manages 22,000 homes in the UK, and the British government is planning cuts in social housing in an effort to curtail a record deficit. The cutbacks in financing for social housing are providing additional opportunities for investors, as social housing providers are looking around for new sources of funding.
UK laws were changed last year enabling investors to profit from social housing for the first time, and with a waiting list currently at 1.8 million there is definitely a real need for extra homes. Chinese businessmen, faced with high real estate prices in their own country, are increasingly choosing to invest in all types of UK property.
Social housing in the UK has historically been provided by non-profit associations and local governments, with the rent being subsidized by the state.
Pinnacle intends to spend up to £500 million on housing projects in the UK over the next few years, and is working closely with the London Borough of Lambeth in a jointly funded project to create nearly 1,000 homes which will then be managed by the company. Half of these properties will be social housing, and there are expectations that this initial funding could just be the beginning of further investments.
It is anticipated that more foreign investors will choose to put money into the UK social housing market because it offers reliable returns, with yields being estimated to by Lloyd be about 5%. Savills currently owns 3% of Pinnacle.