(Yicai Global) March 26 -- Property is considered an investment of choice, and Chinese property transactions overseas are predicted to hit USD220 billion by 2020. A survey completed in 2019 by Chinese real estate investors shows a slightly more interest in countries around the world than closer Asian countries, with Singapore at only 14% when compared to the U.S. at 35%, UK/Australia at 24%, and Hong Kong at 18%. Purchases in foreign countries appear to be slowing, allowing for an increase in local investments.
Increasing Interest In Local Markets
As recently as 2018, Thailand has become the third most desired destination for Chinese homebuyers behind only the U.S. and Australia. Despite a ban on foreigners owning land, condos are the ticket item Chinese investors are putting their money into. This comes as other countries, such as Canada or New Zealand have enacted bans or restrictions on foreign investors or possible land owners. Investors from China have also passed Singapore as the largest investor in Malaysian property. With the depreciation of the currencies in Southeast Asian countries, there is also a draw due to their close Proximity to China and their Belt and Road Initiative projects.
Investments Around The World
It's estimated that since 2010, Chinese investors have purchased more than USD430 billion of international properties. Despite that large figure, over the last few years locations in the US, Canada, Australia, and New Zealand have experienced as significant drop in real estate investments by Chinese investors. At the same time Europe and Asia saw a significant increase of 200% or more in real estate investments. While the U.S. has not enacted any legislation to slow or impede foreign investments in real estate, the slowdown is seen to be a combination of factors such as the dynamics of the real estate industry, economic forces and Chinese domestic concerns. In 2016, China enacted restrictions on the amount of money which could be transferred out of the country.
The Future of Chinese Real Estate Investment
Investors have already made a mark on countries where they've invested in real estate. The return has been increased connectivity and growth for the countries invested in, and for the investors, they're getting the returns they've expected though patience and long term investing. However, some countries and cities have seen it as a possible influence on the politics of a few countries, or at the very least seen as contributing to increases in pricing and mortgage interests. With China curtailing the outflow of money from the mainland, it shouldn't be seen as the death of investing from Chinese investors. This offers the opportunity for middle-class Chinese to find investments where they can park their money as they look to secure the future for their money and their children.
There's no need to be concerned about the Chinese government's crackdown on spending outside the country, since Chinese real estate investors are still set to be largest growing property purchasing group out of all. With developing countries having better yields than developed nations, this will always ensure the attraction of Chinese investors for the foreseeable future. Combined with other motivations such as lifestyle, emigration and education, ensures Chinese investors will continue to go outside of China for real estate investments.
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