Chinese appetite for overseas assets continues to grow in 2017

Chinese appetite for overseas assets continues to grow in 2017

 

Chinese investors are focusing their interest in new overseas property markets as a result of uncertainties surrounding geopolitical and economic developments.

 

Summary

  • Chinese investor’s appetite for property grows despite uncertainties surrounding global geopolitics and macroeconomic developments
  • Hong Kong remains a popular investment hotspot, while Chinese interest in UK property has increased significantly since the Brexit vote
  • With a 50% increase in investor interest in Q4 of 2016, Manchester has been identified as the most popular UK city amongst Chinese investors

 

Chinese investors and their appetite for overseas assets have been prevalent within the property market for a number of years, and despite uncertainties surrounding global geopolitics and macroeconomic developments, their interest only continues to grow.

Buoyed by the hedge Hong Kong property provides against further RMB depreciation, 2016 saw Chinese investment of $5.2bn in both completed properties and underdeveloped land in Hong Kong and Kowloon, according to figures from Real Capital Analytics.

This growth contrasts sharply with Singapore where Chinese investment for 2016 was significantly lower than Hong Kong at just $600m. Weaknesses in the oil and gas sector, finance and shipping were reflected by a sluggish economic performance for the year, which subsequently affected the property market in the fourth quarter of 2016.

Conversely, economic developments within Britain have led to a dramatic increase in Chinese investment interest. The UK’s decision to leave the EU last June saw the Sterling exchange rate fall to its lowest level in 31 years, rendering UK property considerably less expensive to overseas investors, as a result the number of enquiries from Chinese investors grew by a third in the fourth quarter of 2016

Manchester in particular is seeing a substantial increase in interest from overseas investors, after being named by HSBC in 2016 as the city with the highest yields in Britain.

With a booming rental population, considerably lower home and Land prices lower than London and the rise of the Northern Powerhouse, Manchester offers great investment potential for well capitalised developers, and Chinese investors are certainly recognising this with interest increasing by 50% in final quarter of 2016.

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