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“Belt and Road” policy will promote Chinese outbound real estate investment: Knight Frank
By:Jiang Wenran  |  From:english.eastday.com  |  2016-04-29 13:46

Knight Frank yesterday held a forum to announce a report on Chinese outbound real estate investment situation.(Photo: Fan Yicheng)

Shanghai, April 29- Chinese outbound real estate investment continued to grow strongly in 2015, despite existing domestic market uncertainties. By the end of 2015, the total Chinese outbound capital has reached nearly US$30 billion, doubling that of 2014. Knight Frank, a leading independent global property consultancy yesterday held a forum to announce a report on Chinese outbound real estate investment situation.

Reporter learned from the forum that global gateways continue to attract the bulk of Chinese overseas real estate investment in 2015. The insurance giants in particular, continue to splash out on trophy properties. There has been significantly increased investment in US commercial real estate, making it the fastest growing mature market. Meanwhile strong growth in Australia continues unabated while investment in the UK is on par with that of 2014.

Large investors continue to favor gateways because of the availability of stock, capital value and rental growth. Paul Hart, Executive Director, Greater China Knight Frank comments, “Manhattan, New York has become the top investment destination in 2015 having attracted US$5.78 billion of investment, accounting for 52.3% of the total amount of Chinese investment in the United States.”

Dominic Ong, Senior Director, Head of Asian Markets, Capital Markets at Knight Frank Australia(Photo: Fan Yicheng)

This is followed by Sydney and Melbourne in second place in 2015, attracting a total of US$3.8 billion of Chinese investment. “In 2015, Australia continued to see rapid growth in real estate investment from China,” Dominic Ong, Senior Director, Head of Asian Markets, Capital Markets at Knight Frank Australia, indicates that the China-Australia Free Trade Agreement, the Qualified Domestic Individual Investor or QDII schemes are expected to drive more Chinese investment in the Australian property market.”

London was in third place mirroring the momentum of previous years. Its rental growth prospects are strong with the vacancy rate at a 14-year low. Buyer interest is focused on development sites and short income assets, particularly in London’s tech villages. Although relatively expensive, London delivers consistently good, demand-driven rental growth, making it attractive for investors in the coming 12 months.

The recent RMB devaluation and stock market turbulence have contributed to the market uncertainty and increased investors’ wariness of further policy intervention. This underscores the need for diversification for Chinese investors, particularly to overseas markets.

David Ji, Director and Head of Research and Consultancy(Photo: Fan Yicheng)

“In contrast to some predictions, the growth of Chinese outbound in 2016 will be strong despite the ups and downs of the domestic economy. And the availability of quality stock has significant impact on the short- to mid-term investment decisions,” David Ji, Director and Head of Research and Consultancy pointed out that as Chinese capital outflow increases with policy support such as “Belt and Road” and the Asian Infrastructure Investment Bank, as well as China’s trade and financial initiatives, capital outflow will become increasingly sustainable.

Specifically, “Chinese investors will continue be interested in the traditional gateway markets,” Paul Hart believes that the advent of the “Belt and Road” policy will also focus Chinese institutional investors on economies that have close geographic and economic ties with China. Beneficiaries will include Hong Kong, ASEAN counties and India. “Interestingly a Tokyo office investment by CIC was one of the biggest investments 2015 and we expect that Japan will continue to be of interest.”