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Recent state capital controls have stunted China’s corporate investment in international real estate, yet individual Chinese buyers are still showing considerable interest in property outside their own country, suggests online property portal Juwai.com.
Outbound investment from China’s real estate sector into international assets sunk 82 percent during this year’s second quarter on a year-over-year basis, China Banking News reports.
However, Matthew Moore, president of the Americas for Juwai, which links buyers in Mainland China with international listings, explains that this number does not include smaller individual investors, the kind who may invest in an overseas house or condo, for instance.
“[It’s] really about corporate acquisitions in the international real estate industry. It’s not the sort of regular mom and pop buyer that agents and developers see visiting their listings,” Moore says in a statement sent to BuzzBuzzNews.
In addition to capital controls, Chinese corporate acquisitions have sunk because of the country’s “politics, a shift towards domestic investment back in China, and the specific strategic decisions of each company involved,” Moore outlines.
The Juwai executive also suggests major deals in past years have boosted previous investment numbers considerably.
By way of example, Moore notes that Anhang Insurance Group shelled out a record-breaking (and headline-making) $1.95 billion on purchase of the Waldorf-Astoria in New York in 2014.
More recently, Chinese corporate investors have sidestepped this type of purchase. “Some of these acquisitions were funded with risky types of debt, which have since lost favor with Chinese regulators,” Moore writes.
“Regulators are clamping down to stabilize the financing market, and that has made it more expensive to fund giant acquisitions like of the Waldorf,” he adds.
However, with investment outflows shrinking, Moore says a common view among observers now is that the Chinese government will ease capital controls ultimately, taking a measured approach.
“China very much wants to play a large international role in the world, but it doesn’t want to repeat the Japanese experience in the 1980s, when a huge overseas investment boom was followed by massive economic pain,” he explains.
Juwai is watching developments in the corporate sector before releasing any estimate on how 2017 will compare to other years.
But as for the mom-and-pop or individual buyer, Moore says this year is shaping up to see one of the largest investment tallies on record.
“Current trends suggest 2017 will be the second or third biggest year we’ve seen, while down from 2016,” Moore states.
In the first half of this year, inquiries from prospective Chinese buyers into international properties have increased by 8.7 percent over the same period last year.
“They (inquiries) were not as high as the peak we saw in the second half of 2016,” Moore notes.