China investors set to investment more in overseas property investment

China investors set to investment more in overseas property investment 2

Mainland Chinese buyers are expected to snap up an increasing amount of overseas real estate this year — even despite political resistance and sensitivity about such investments around the world.

Chinese investments from infrastructure to property buying have been political hot potatoes during elections and beyond, with newly elected governments — such as Malaysia’s — injecting uncertainty into projects and private residential projects viewed to be aimed at foreigners, many of whom are from mainland China.

More drastically, New Zealand has banned many foreigners from buying existing homes as its government attempts to improve the affordability of residential property. Formerly, U.S. investors were seen as putting upward pressure on New Zealand property prices, but their interest has been dwarfed by a more recent influx of Chinese buyers.

Despite the global resistance, mainland Chinese residential and commercial international property purchases in 2017 reached a new record of $119.7 billion, up 18.1 percent from the $101.4 billion in 2016, according to an annual report from Juwai, an online Chinese real estate portal.

Since 2010, Chinese investors have acquired international property totaling more than $430 billion, the report added. Juwai expects mainland Chinese commercial and residential property investment to increase 3 to 8 percent this year from a year ago, bringing investment amounts up to $123.3 billion to $129.3 billion globally.

The concerns about such investment include mainlanders’ demand driving property prices up too much for domestic home buyers, and having a large Chinese population that holds increasing sway over local issues. One insider at a Chinese property company insisted, however, that investors coming from the world’s second-largest economy have just had a stroke of “bad luck” in shouldering the blame for market forces.

“The markets where concern about foreign buyers (have) been greatest are those with a combination of factors, usually including high population growth, constraints that limit the construction of new housing, cheap and available mortgage credit, and rapid price gains,” said Carrie Law, CEO and director of Juwai.

“Foreign and especially Chinese buyers have just had the bad luck of becoming visible in markets around the globe at the same time as interest rates hit extraordinary lows. Low rates, of course, lead to higher prices and hot markets, meaning that affordability fell,” Law told CNBC.

In fact, a large proportion of the price surges in large cities were driven by local investors and lenders, Law added.

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