China to spend $104bn on property this year

by Miklos Bolza07 Jul 2017
Global real estate investment from Chinese nationals is expected to hit $104.5bn this year, according to a new report from property portal Juwai.com.

These figures are lower than the record highs of 2016 when China poured $133.7bn into property across the world. Australia received the second largest share of this outflowing capital, Juwai’s Chinese Global Property Investment Report found.

For specific amounts invested in Australian property, data from the Foreign Investment Review Board (FIRB) found that Chinese buyers were approved to purchase $23.8bn of property in 2015-2016 and $18.4bn in 2014-2015.

Juwai’s estimate of $104.5bn is calculated from real estate purchases made by both corporate and individual investors and is based on the firm’s own data as well as that of industry and government.

“This is the first time in history that Chinese buyers acquired more than AU$130bn of international real estate,” said Sue Jong, chief of operations for Juwai.com. “The 2016 total represents a 25.4% increase over 2015 and an 845% increase over five years. Our forecast suggests 2017 will also be one of the top three years on record.”

Although investment flows in Australia had dropped significantly from their peak, they still remained strong by historic standards, she said. This decrease has been helped by tighter capital controls, bank lending standards and higher foreign buyer taxes.

Jong expected significant Chinese investment in the years to come and told Australian Broker that Australia’s share of that money would remain more or less the same.

“However, it's too early to predict what exactly will happen over the next 10 years. What we can say is that we are confident that if current trends are maintained, Chinese real estate investment in Australia in 2017 will be about the same as 2015.”

Last year, the top five countries for Chinese investment by dollar amount were as follows:
  1. United States
  2. Australia
  3. Hong Kong
  4. Canada
  5. United Kingdom
Australia has maintained the second spot for the past four years, Jong said. While this could change, she predicted that the country would retain this ranking in the years to come.

Overall, Chinese investment globally remains at relatively high levels, she said.

“Current trends suggest that Chinese property investment this year will be on par with the levels of 2015, or about $105bn. That would make 2017 one of the top two or three years in history. While levels are lower than in 2016, they will still be extremely high by any standard,” Jong said.

A conservative estimate for Chinese investment over the next decade is more than $2trn across the globe, she continued, with half of these investment dollars possibly going into property.

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