JLL: Overseas property investments by Chinese hit new high in 2016

PETALING JAYA (Jan 23): China has hit record sales of US$33 billion (RM146.6 bil) in overseas commercial and residential property investment for 2016, an increase of 53%  from the previous year, according to international real estate firm JLL.

In its latest “Global Capital Flows” report, the real estate services firm stated that the hotel and industrial sectors recorded the largest increase in 2016 owing to significant transactions in the US in the form of portfolio sales and Chinese appetite for industrial parks.

Interestingly, investments in land, offices and hotels account for 90% of all Chinese outbound capital in the last three years.

“Hotel activity last year was boosted by the purchase of Strategic Hotels and Resorts by Anbang Insurance for over US$6 billion (RM26.6 bil).

“China Life Insurance has secured assets across the hotel and office sectors with portfolio purchases from the Starwood Capital Group and an office tower in Manhattan while sovereign wealth fund Chinese Investment Corp has been active in the office sector in New York as well,” said JLL’s Global Capital Markets research director David Green-Morgan.

Meanwhile, land acquisitions by Chinese investors made a comeback in 2016, with a rise of 44% following significant transactions in Hong Kong, Australia and Malaysia.

“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,” added Green-Morgan.

Beyond investment abroad, Chinese investors have also further deepened their investment domestically, accounting for more than 86% of domestic transactions in 2016, compared with about 75% over the past few years.

According to head of capital markets for JLL Shanghai and China Johnny Shao, China’s tier 1 cities were most attractive to the domestic investors.

“The total transaction volumes in Shanghai reached US$14 billion, accounting for 48% of China’s total investment volume. Beijing was the runner-up, accounting for 16% of overall transaction volume in 2016 while Shenzhen came in third, reaching 10% of the total transaction volume,” he said.

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