Chinese real estates investment abroad dropped in Q3 2017, reaching its lowest level of more than four years. This highlights the impact of tougher capital controls in China that restructure global asset markets. Chinese insurers, banks and private equity companies have emerged as one of the most important buyers of premium office buildings and luxury hotels in different markets across the globe. However, fears of excessive capital flight, as well as depreciation of the currency, led Beijing to curb deals abroad at the end of last year.
Chinese real estates investment abroad reached 2.5 billion USD in the third quarter of this year – the lowest amount since the fourth quarter of 2013, according to a new report by the global real estate company Cushman & Wakefield. In the first nine months of the year the volume reached 18.2 billion USD, which is less than half of the investments for the whole last year.
“Increasing government attention on investment activity in the property sector combined with investor prudence has a negative impact on the volume of transactions abroad”, said ‘s Managing Director for Research in China, James Shepherd.
According to the Chinese finance ministry, the total investments of Chinese companies in the non-financial sector shrank by 42% in January-September compared to the same period last year.
In June, the chairman of Anbang Insurance Group, the most aggressive buyer of property abroad, disappeared and is supposed to be detained by the state.
This year, buyers of property abroad from China direct their interest to projects under construction. Investments in this type of property account for 58% of all investments in the third quarter. At the same time, investment in office buildings shrank from 71% last year to 28% this year.
Analysts say Beijing considers investment in construction projects less speculative than buying prefabricated buildings, while helping Chinese entrepreneurs gain valuable experience abroad.