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Chinese property investment skyrockets

By James Mitchell
28

An inaugural report by global property group Knight Frank has found the total value of Chinese outward real estate investment has jumped 1,900 per cent since 2009.

Launched last month, Chinese Outward Real Estate Investment: After the Initial Waves, What's Next? found Chinese property investment in overseas markets grew from US$0.6 billion in 2009 to US$12 billion in 2013.

Focusing on three key markets – the US, UK and Australia – the report found that Chinese real estate investment volume in Sydney and Melbourne was almost comparable to that of London and New York in 2014.

The report also noted that the Free Trade Agreement (FTA) signed between Australia and China in November will accelerate the flow of Chinese investment funds into the Australian property market.

Neil Brookes, head of capital markets for Asia Pacific at Knight Frank, said investors today are shifting their focus towards sustainable returns in the long term.

“The key factors for Chinese investors are the policy push from the Chinese government to diversify into other countries; a softening domestic market; and the pull from higher returns achievable in overseas markets,” Mr Brookes said.

“Australia, the US and the UK are the top three markets most Chinese investors are looking at.

“We saw five times as much capital outflow from China into these three markets in 2013 alone, compared to the previous year,” he said.

While capital cities are still favoured by Chinese investors, they are starting to look further afield to provincial towns for better yields, according to Knight Frank's head of research and consultancy for Greater China, David Ji.

Meanwhile, the weakening Chinese property market is further driving investors towards overseas markets such as Australia.

AMP Capital chief economist Shane Oliver last week forecast that China’s property slump could trigger a "hard landing".

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