2016’s record Chinese investment likely to drop in 2017

2016’s record Chinese investment likely to drop in 2017

Investment drop
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Investors from China spent a record A$133.7 billion in 2016 on international real estate, and Australia received the second-largest share, according to a report released today.

The report by Juwai.com, the number one Chinese international real estate website, projects that Chinese international property acquisition will be lower in 2017, at an estimated A$104.5 billion.

Data from the Foreign Investment Review Board shows Chinese buyers were approved to purchase A$23.8 billion of property in Australia in 2015-2016 and A$18.4 billion in 2014-2015. This includes both corporate and individual investors.

Juwai.com’s chief of operations, Sue Jong, said this is the first time Chinese buyers have acquired more than A$130 billion of international real estate.

Ms Jong said investment flows in Australia have decreased “markedly” from their peak, while remaining “strong” by historic standards.  

“Capital controls, bank lending standards and foreign buyer taxes have combined to wind back the clock to 2015,” she said.

Ms Jong said despite China’s “torrid” pace of overseas acquisitions in recent years, it remains underinvested globally compared to other economies.

She said China ranks only 18th in the world by aggregate ownership of foreign real estate to GDP, at just 12 per cent, well below the OECD average of 42 per cent.

But this gap is likely to close.

“We believe we estimate conservatively when we forecast that Chinese investors will acquire more than A$2 trillion of overseas assets in coming decade or so as they close the underinvestment gap. Up to half this new investment could go to property,” said Ms Jong.

According to the report, the top five countries for Chinese investment by dollar value in 2016 are:
1. United States
2. Australia
3. Hong Kong
4. Canada
5. United Kingdom

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