Chinese real estate investment hit record high in 2016

A record amount of global real estate investment was made by Chinese buyers over the course of last year, according to new research from JLL Global Capital Flows.

Chinese buyers snapped up $33 billion worth of property, both commercial and residential, last year, which represented a staggering rise of almost 53 per cent from the year prior, the research showed.

Focusing heavily on property in the US – Chinese buyers injected $14.3 billion into this marketplace – they also gravitated towards residential and commercial premises in Hong Kong, Malaysia, Australia and the United Kingdom.

While the research suggested that it was unlikely that 2017 investment volumes would hit the same giddy heights as they did in 2016, mainly due to the tightening capital controls in China, buyers from China will still remain key players across the global property investment stage.

Chinese regulators explained the oversight of capital outflows from the country, saying that all foreign purchases worth more than $10 billion, or more than $1 billion if not linked to a buyer’s main business, would now need to be signed off. Regulators also confirmed that all purchases of international real estate that total more than $1 billion and are made by state-owned enterprises, must be stopped. While these rules have been in place for some time, it is only over the course of the last few months that they are being carried out far more strictly. It seems this has already had a major impact on acquisitions by Chinese buyers – real estate developers across the US have already voiced their beliefs that delays are starting to happen with property transactions by such buyers as a direct result of the regulator clampdown.

David Green-Morgan, JLL Global Capital Markets Research Director in Singapore, said that, despite the regulators stepping up their rules: “We do believe that Chinese investors will continue to be major movers of capital into global real estate for many years to come.”

“But a similar increase in 2017 may be challenging given the recent discussion about China monitoring its capital outflows,” he confirmed.

Some of the biggest Chinese investments made in the US in 2016 were in the real estate sector, with the sector proving endlessly popular with investors from China and from other countries too. Over the course of the last few months of 2016, Anbang Insurance Group finalised its $6.5 billion purchase of Strategic Hotels and Resorts, while Chinese conglomerate HNA purchased a 25 per cent stake in Hilton from private equity firm Blackstone Group for $6.49 billion. Another major transaction was the purchase of Starwood Capital Group for $2 billion by China Life Insurance, who also snapped up a major office building located in Manhattan for $1.65 billion.

As well as being keen to snap up commercial premises such as offices and retail space, Chinese investors are also heavily focused on land acquisitions, the research revealed, with a 44 per cent rise in the number of such purchases over the course of 2016. Particular focus was placed on land packages located in Hong Kong, Australia and Malaysia, with some of the most noteworthy deals including Chinese property group Boyuan Holdings’ purchase of 40.5 hectares of land in western Sydney, Australia for A$70 million. Another major deal was the purchase of a residential side in Hong Kong by Minmetals for HK$4 billion in August of last year.

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