Here are three examples that show Chinese real estate investors are as keen as ever to buy property overseas.

CIC International pays $2.5 billion for Australian property portfolio

The Chinese Investment Corporation became the buyer in the largest ever direct office sale to take place in Australia when it offered $2.5 billion to purchase a portfolio of assets from Morgan Stanley Real Estate Investing. The seller, operating through its Investa platform, agreed to sell stakes in nine buildings located in Brisbane, Melbourne and Sydney. CIC now has a quarter stake in the Australian headquarters building of Deutsche Bank: 126 Philip Street, considered by many to be one of the finest examples of office towers in Sydney (source: The Australian).

Over $300 million invested in Boston’s Pier 4

In April it was announced that two Chinese companies, Ping An Insurance Group Co of China Ltd and China Life Insurance Co Ltd, would each contribute $167 million towards the first phase of the redevelopment of Pier 4 in Boston. The $500 million redevelopment, which covers half a million square feet, includes 100 luxury condos and a 13-story office building with two-story underground car park. Chinese money accounts for over two thirds of the total investment (source: Reuters).

Chinese real estate investment in Canada picks up

Compared to the $10.5 billion worth of Chinese real estate investments that have taken place in America over the last five years, China’s contribution to Canadian real estate has been small.

However, two recent deals have seen the value of Chinese real estate investment leap up. In October an unknown investor offered $122 million for the United Kingdom building in Vancouver, which works out at $600 per square foot for the 212,000 square foot building, or about twice the average market value. In August the Anbang Insurance Group Co. Ltd. spent $100 million on a land lease for 70 York Street, Toronto, which would allow them to control the HSBC building located there (source: Financial Post).

These are just three of the many Chinese real estate deals made in 2015. The Chinese appetite for overseas property as a safe investment option is greater than ever. With the right marketing and an understanding of the needs of the Chinese real estate investor, your project could attract some very lucrative interest from the Asian market.

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In just ten years China has become one of the most influential investors in the world. What is driving the change?

Loosening of government restrictions

The Chinese government has been tightly controlling the movement of money out of the country for many years. Currently individuals are allowed to exchange no more than $50,000 per year into foreign currency, and can only make overseas investments through licensed investment funds. With the movement of capital restricted, many wealthy Chinese have turned to overseas real estate investment as a safe place to put their money (source: Bloomberg Business).

Decline in home property market

China’s economy has been slowing down recently, with many experts blaming the declining property market. By April 2015 property prices had fallen 6.1% on the previous year across 70 Chinese cities (source: CNBC). An overinvestment in property has created huge amounts of debt and an overhang of stock (source: Business Insider). Although house prices have risen this month, the current state of the market does not make it an attractive proposition for wealthy Chinese real estate buyers looking for low-risk opportunities.

Strategic real estate investment brings residency opportunities

Wealthy Chinese aren’t just putting their money into UK property in order to make a profit or keep it safe. Some need the property itself in order to help with their future plans. Not only can properties in London, or other parts of the UK, serve as a good base for dealings in Britain or across Europe, investing in the country can also be the first step towards gaining dual citizenship; something that makes it much easier to travel and invest in a foreign country. The UK allows foreign investors with more than £10million of their money held in the country to apply for citizenship after two years (source: The Guardian).

Access to better education and prospects

China’s high pressure education system involves a lot of testing and many parents are worried that it is detrimental to their children. Wealthy Chinese parents are recognising the importance of a well-rounded education – one that allows pupils to explore and discover. Moving abroad, where better education systems can improve the future prospects of their children, is the top reason to emigrate for 78% of the wealthy Chinese thinking of leaving the country (source: Bloomberg Business).

Several other factors are behind the wealthy’s desire to leave their home country. China is still suffering from overpopulation and pollution in its main cities. Many Chinese see real estate investment in London’s leafy suburbs and the UK’s quiet cities as the gateway to discovering a new quality of life.

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In 2014 Chinese investors spent over £1.2billion in just three real estate purchases: 10 Upper Bank Street, Tower Place, and 111 Old Broad Street (source: UK Business Insider). The spending is showing no signs of letting up with a new development project in the Docklands gaining £1billion in backing from a single Chinese real estate investment group (source: The Telegraph).

Overseas property safer than Chinese stocks

The super-rich in China are turning their attention from stocks to property. The stock market at home is unpredictable. Major Chinese shareholders sold nearly double the amount of shares (valued at 360billion yuan) in the first half of 2015 than they did in the entire of 2014. Chinese shares have lost more than 20% of their value since the middle of June (source: The Guardian).

For wealthy Chinese investors looking for a safe investment for their money, real estate investment in the UK has a lot to offer, thanks to the market’s transparency and liquidity.

UK is Europe’s most transparent market

Last year the UK was found to have the most transparent commercial property market in the world. A transparent market is one where all the relevant data and information is publicly available. The move towards greater transparency has been driven by the attitudes of millennials, as well as the government’s desire to encourage future investment in the country.

For Chinese real estate investors, their home market is much slower in moving towards transparency goals. Tier 1 cities were ranked at 35 on the global table, classed as ‘Semi-Transparent’ (source: JLL).

Liquidity is important for a real estate investor

As well as being highly transparent, the UK property market was also the most liquid market in 2014. The liquidity of a market refers to how easily investors can enter and exit the market – the importance of this is obvious for Chinese real estate buyers with a lot of money to spend, on the lookout for a good return. In 2014 11.3% of the UK’s property stock was transacted, putting it ahead of Sweden (9.4), Finland (7.7), and Germany (4.2). The UK was also Europe’s most liquid property market in 2013 (source: CoStar).

Chinese high-worth individuals looking to live in UK cities

A recent survey of China’s rich (those with more than $1.6million in assets) found that 64% planned to leave the country and live overseas, or were already in the process of emigrating. For these people, London holds many opportunities. Clean air, more space, access to prestigious educational establishments for their offspring, and lower prices are all factors that are enticing the rich away from their home country (source: Wall Street Journal).

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In 2014 Chinese real estate investors invested more money into the capital than all European investors combined, with a total of £2.2billion, beaten only by £3.4billion from the US. Analysis from Savills, an international real estate advisor, suggests that the key Chinese investors in the market are making multiple transactions. It is hotly anticipated that 2015 will be another strong year for Chinese investment in London (source: Property Wire).

Large scale opportunities

Chinese real estate investors are not just making lots of investments; they are making sizeable ones. In 2014, China Life – China’s biggest life insurance provider – bought 70% of a 1million square foot office located at 10 Upper Bank Street. The building, along Canary Wharf, carried an annual rental of £44.35million pounds, and China Life paid £795million for its share.

The investment dwarfs the previous record sum paid by a Chinese real estate investor when Ping An Group paid £260million for the Lloyd’s Building (source: Mingtiandi).

Chinese investors backing development projects

Chinese money is also being used to finance new developments and construction in the capital. A new project, masterminded by the Advanced Business Park in Beijing, aims to create a centre for Asian business in eastern London. The Asian Business Port will be a business and retail hub, complete with housing and a waterfront boulevard, and is scheduled for completion in 2023.

While only a year old, China Minsheng Investment has already become one of China’s largest private equity firms. The firm, which has an $8billion investment fund, is backing the Asian Business Port with £1billion ($1.5billion) worth of investment, making Minsheng Investment the largest investor in the project (source: Forbes).

More real estate investors from China looking to London

Chinese real estate investment in the United Kingdom is not a trend that is likely to stop any time soon. As the Chinese economy grows, more people are looking to secure assets abroad, with property being one of the most sensible investment choices. As the Chinese currency strengthens, buying property in London becomes more appealing: investors in 2013 were enjoying buying property at a rate 8% cheaper in 2013 than it was six years prior (source: Property Wire).

According to one report, it is anticipated that £105billion worth of Chinese money is earmarked for investment in UK industries between now and 2025, with real estate investment potentially accounting for £36billion of the total over the next 10 years (source: Pinsent Masons).

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Strategic properties

While there is still plenty of investment purely for the purpose of generating a decent return, the Chinese are also participating in strategic real estate investment which can create opportunities and open doors to Europe and other developed countries. Portugal was a favourite amongst many Chinese real estate investors (ranking number eight globally) due to its new laws which meant that foreign investors who spent more than €500,000 on a property were allowed to live in Portugal, applying for Portuguese citizenship after six years, with the freedom to travel throughout the EU. Such privileges made investing in Portugal an appealing move, for students as well as business owners.

Chinese buyers were looking for properties in Canada and Thailand for similar reasons. Chinese business people vacationing in Thailand could easily build up the contacts necessary to tap into the 500 million strong South East Asian market (source: Forbes).

Holiday homes

Many Chinese real estate buyers are simply interested in finding somewhere they can relax, unwind, and escape from the heavily populated major cities. In the USA Chinese real estate investment is popular in California, Florida, New York and Texas, amongst others. Texas is attracting Chinese visitors due to its warm climate and the current low cost of property. Here, real estate investors are looking for single family detached homes which they plan to use for more than six months (source: Wealth daily).

There are many reasons why Chinese investors are looking for property abroad. Government restrictions on second and third homes are forcing wealthy Chinese to look elsewhere. And while the people in China are becoming wealthier, Chinese cities are becoming more cramped and more polluted. Many Chinese want to live abroad in order to find a cleaner, healthier environment in which to spend their time, and with an average budget of 2million yuan, they have the resources to do so (source: South China morning Post).

Chinese real estate buyers – a high-value, high growth market

Wealthy Chinese are looking for all different kinds of real estate investment opportunities. From well-off families choosing a second home to provide a better quality of life, to the large consortiums aiming to inject billions of pounds into the British economy through regeneration projects in cities such as Birmingham (source: Birmingham Post), there is a huge pot of Chinese money earmarked for foreign investment. Someone has to earn it: will it be you?

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