Chinese outbound real estate investment at seven-year low

Chinese outbound real estate investment in the first half of 2019 fell to a seven-year low due to domestic policy restrictions and global economic uncertainties, according to new research from Cushman & Wakefield Research.

During the first six months of the year, mainland Chinese real estate investment overseas (MCREIO) was down 66% to US$3.8bn (€3.44bn) and Hong Kong real estate investment overseas (HKREIO) was down 31% to US$5.2bn from the same period a year earlier.

The report, which sourced most of its investment transaction data from Real Capital Analytics, said MCREIO’s performance is the lowest point recorded since 2012.

MCREIO investment fell as a direct result of the “prevailing tough outbound investment policy and tightened real estate lending environment in China, coupled with heightened global economic uncertainty”, the report said.

Despite MCREIO’s low outbound investment during the first half of 2019, it did see some signs of recovery in the second quarter of 2019 compared with the three months earlier, it said.

The Cushman & Wakefield report said Hong Kong accounted for the majority of total MCREIO transactions in the first half of the year with a 61% share, followed by Australia’s 20% share.

James Shepherd, head of research, Asia Pacific at Cushman & Wakefield, said traditionally favoured destinations, such as the US and the UK have remained quiet as trade friction and Brexit uncertainty has rolled on.

“Conversely, Singapore started to attract increased attention from Hong Kong investors, and may increasingly be viewed as a comparatively safe haven given the challenges some other global destinations are facing.”

Jason Zhang, head of China outbound investment and advisory services, Cushman & Wakefield, said: “We continue to witness subdued activities from MCREIO amid domestic policy restrain and global uncertainties.

“However, in a rate-cut environment, the demands for core assets will be on the rise and both MCREIO and HKREIO will look for allocations globally.”

 

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