Chinese outbound investment in real estate in the first quarter of this year increased by 25 percent compared to the same period of 2013, but the big story is the 80 percent jump in spending on overseas residential development projects.
According to recently released figures from property agency JLL, overall outbound investment in real estate by Chinese firms and individuals reached US$2.1 billion in the first three months of this year, however, growth in outbound commercial real estate deals was flat compared to the same period in 2013.
The 25 percent increase in outbound deals largely came from investments in residential development projects, many of which are aimed at selling overseas homes to wealthy Chinese buyers. During the period from January through March, Chinese developers put US$1.1 billion into new overseas residential projects, up from $600 million in 2013, according to JLL’s research.
Greenland Group Leads Overseas Charge
The biggest Chinese buyer of overseas residential sites early this year was Shanghai’s Greenland Group, which purchased two sites in London, two more in Sydney, one in Malaysia, and another in Toronto. The company also entered into a joint venture with Thailand’s Magnolia group to build homes in the southeast Asian nation.
The Australian subsidiary of Guangzhou’s Country Garden Holdings, also got in on the action by purchasing a development site in northwest Sydney for AU$73 million (US$65 million).
Beijing-based Dalian Wanda made its second investment in Europe during the first quarter by acquiring the historic Edificio Espana building in Madrid for €260 million (US$358.6 million). The company is said to be planning to redevelop the building for both residential and commercial use.
Also during the first quarter, China Vanke, the country’s largest developer by sales, committed an unspecified amount to building a 61-storey luxury residential tower in Manhattan, together with US partners RFR and Hines, and with financial backing from a fund belonging to Chinese investment firm Cinda.
Building Overseas Homes for Wealthy Chinese
The rush to develop overseas residential projects is driven in large part by the appetite of Chinese wealthy Chinese individuals for overseas homes.
In the case of the Australian market, according to a recent study by Credit Suisse, buyers from China are expected to purchase US$39.54 billion worth of Australian residential property over the next seven years.
The investment bank estimates that 12 per cent of all new housing purchases and up to 18 per cent in Sydney and 14 per cent in Melbourne are by Chinese buyers.
A report from Reuters last month also indicated that Chinese are now the top buyers of luxury homes in Manhattan.