Chinese outbound property investment increased by 25 percent to
US$2.1 billion last year according to the latest figures from JLL, but
while Chinese institutional investors are still major buyers of
commercial property, the real growth has been in the purchase of
residential land for development.
Although commercial investment
was flat over the first quarter of the year, Chinese investors still
spent more than US$1 billion outside of the country. The U.S. and
Australian real estate markets attracted most of this capital from China
in Q1 — the United States with USD 732 million and Australia with
US$400 million.
While the office sector continues to dominate as
the preferred asset class among Chinese commercial real estate investors
that are active overseas, there is an increasing interest in
residential development, as demonstrated by Greenland’s recent purchases
in London, Los Angeles and Sydney, as well as Country Garden’s first
foray into the Australian market earlier in the year.
David
Green-Morgan, Global Capital Markets Research Director at JLL, said: “As
major Chinese residential developers look for opportunities overseas to
counteract slower economic and price growth at home, the residential
development investment is up 80 percent (from US$ 600 million to US$1.1
billion), with the United Kingdom, Australia and the United States
seeing most of the investment.”
Greenland has been the most active
of all Chinese residential developers with purchases of the Ram Brewery
and Hertsmere House sites in London, together with a site in Los
Angeles and Sydney. While Greenland pursued this strategy alone, a key
component of Chinese investment in the first quarter of this year has
been the use of partnerships and joint ventures. This was exemplified by
a recent deal in Chicago where China Cinda joined with the U.S. group
Zeller to buy an office building for US$302 million.
Chinese
property developer Country Garden Australia Pty Ltd provides a further
example of the trend with its first major investment in the Australian
residential property market, purchasing a development site in Sydney’s
north-west for AUD73 million.
While Chinese investment in overseas
real estate continues to be spread across the globe, most of the deals
in Q1 2014 take place in larger, gateway cities such as London, Sydney,
Los Angeles and Chicago.
Darren Xia, Director of International
Capital Group (ICG) at JLL China, noted: “We expect interest and
activity from equity-rich Chinese investors in overseas real estate
markets to continue to grow throughout the remainder of 2014 and, as a
result, it is possible that the total volume of spend by Chinese
investors on commercial real estate outside of China could pass the
US$10 billion mark in 2014.”
Andrew Batt, International Group Editor of PropertyGuru Group,
edited this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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