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China Outbound Real Estate Investment could reach up to $5 billion in 2013

Jones Lang LaSalle experts outline global capital markets landscape for Chinese real estate investors

Money flowing out of China into direct real estate investment overseas reached US$4 billion in 2012 , according to Jones Lang LaSalle, which is 33 percent higher than in 2011.  Continuing this trend Chinese investors have already allocated US$1 billion to overseas real estate in the first quarter of 2013. Addressing a forum of high-profile stakeholders in Beijing, experts from Jones Lang LaSalle outlined the global capital markets landscape and the key trends in Chinese outbound real estate investment.

In the last decade real estate investment opportunities outside of China (‘cross-border’) have increasingly attracted Chinese capital. In 2003, just two percent of all Chinese capital invested in real estate was going overseas; by 2012 this figure had hit a 26 percent. This rapid and profound shift in how capital is being invested has resulted in the growth of China as a key player in the global market for direct investment in commercial real estate.

Arthur de Haast, Head of the International Capital Group and Chairman of Hotels and Hospitality Group at Jones Lang LaSalle, said: “China has always had the potential to be a major source of capital for real estate investment globally, and in the last few years we have really seen this market gather pace. Our forecast is that China, and the Asia-Pacific region as a whole, will see this trend continue over the next 20 years. In the first quarter of this year alone, Chinese investors have poured US$1 billion into London office stock.”
“We think the Chinese investment into overseas markets could reach US$5 billion this year, which is a 20% increase on 2012 levels.”

David Green-Morgan, Research Director, Global Capital Markets at Jones Lang LaSalle, said: “Over the last few years we have seen a global rebalancing towards real estate as an investment asset class. Concurrently we have witnessed a rise in savings rates amongst the BRIC nations, which is providing insurance and pension funds with increased access to capital. We believe that this will transform the commercial property investment market to such an extent that it will be a US$1 trillion market by 2030.”

Jones Lang LaSalle’s market projections:

• Direct Commercial Real Estate transactions to exceed US$1 trillion by 2030.
• Asia-Pacific to see long-term growth in the commercial real estate markets, overtaking EMEA and the Americas by 2021.
• Investors are targeting super-prime assets in ‘super cities’ including: New York, London, Paris, Tokyo and Hong Kong.