"unprecedented" chinese investment set to continue
Chinese investment in overseas property has reached "unprecedented" levels, declares a new report. It shows no sign of slowing down, though, according to the study from Investorist, which finds that all 105 agencies included in its survey expect to see sales increase.
The bullish agents are expected to sell more than 10,000 international properties this year, citing rising demand from the Chinese public.
Indeed, research from leading global management consulting firm McKinsey predicts that the number of Chinese citizens able to afford overseas real estate will quadruple in the coming years: in 2012, 8 million households had disposable annual income of more than $34,000 USD. In 2022, that is expected to grow to more than 32 million.
"China’s domestic real estate market is going down, while the buying power of RMB is going up, definitely more and more people will want to relocate some of their wealth in a different market," predicts Song Han, Director of 5zfang.com.
The most populous and wealthy cities of Beijing, Shanghai, Guangzhou and Shenzhen recorded the highest responses from both buyers and agents, although the report highlights inner cities as also becoming interested in property abroad.
Nonetheless, the majority of buyers are not High Net Worth Individuals, but those with modest budgets: 54 per cent are interested in properties worth less than $500,000 USD, with 35 per cent interested in property worth between $500,000 and $700,000 USD.
"Whilst golden marketing material and promises of exclusive eatures
will attract attention, Chinese purchasers are highly educated and value oriented," explains Investorist Founder Jon Ellis. "Chinese buyers are looking for good value properties in inner city or education locations."
Indeed, 62 per cent of buyers are primarily concerned with the price of he property, followed by its location (29 per cent).
Where are buyers planning to invest? The agencies surveyed rank Australia as the clear number one location, but Investorist notes that the USA is at the top of their shopping list.
Indeed, figures from the National Association of Realtors last year found that Chinese buyers were the biggest spender out of all foreign nationalities, splashing $22 billion on American property with an average sale cost of $590,826.
Portugal has also seen a boom in Chinese sales, thanks to its Golden Visa programme, which Deputy Prime Minister Paulo Portas credits with generating €1.27 billion investment from non-EU buyers.
"European countries with cheaper property prices and easier immigration requirements are becoming more and more attractive to Chinese clients," comments Hector Jiang, Manager of immi-visa.com, but he notes that America is "by all means the No. 1 hot spot" for immigration because of its lower threshold investment of $500,000 USD.
"The UK is also highly attractive for Chinese students," he adds.
Canada used to be a major destination for Chinese investors too, although it recently suspended and restructured its immigrant investor scheme, which is predicted to drive a larger number of buyers to the UK instead.
Regardless of location or motivation, though, the Investorist report confirms that the increasingly influential force of Chinese investment is here to stay.
"Last year, our company with all offices across China sold more than 1,800 Australian properties, mainly apartments," adds Frank Weng from Ausin Shanghai office. "I see no reason why we won’t sell more this year,"
"2015 should be an extremely exciting year for developers and master agents who wish to sell properties to Chinese buyers," concludes Ellis.