Where Next for China’s Overseas Real Estate Investment?

Capital flows into commercial property and land have been the most visible manifestation of China’s internationalisation on the global real estate market so far. Over the last four years (2013-2017), total outbound Chinese real estate investment exceeded US$94 billion (excluding Hong Kong), with approximately 80% into standing commercial real estate.

Capital controls introduced in 2016 have raised questions about the future scale and direction of China’s overseas real estate investment. Chinese investors will continue to be important players in the global real estate market nonetheless, but future activity will be more measured, targeted and will have a different structure.

We are likely to see:

  • A changing investor mix, towards more established and experienced investors, those with robust due diligence processes and strategic focus;
  • Greater alignment with government’s strategic aims, its industrial policy and the international activities of Chinese corporations – including R&D facilities, logistics and interest in tech-rich cities;
  • Increased interest around Belt and Road countries; but a lack of transparency will restrict deals in most BRI countries.
  • Gravitation to the world’s most transparent markets, yet they will continue to widen their net within the ‘Highly Transparent’ countries.

Top 10 Destinations for Mainland Chinese Capital (2013-2017)

The Most Connected Cities with China

Source: JLL, 2018