Chinese outbound investment falls 51% to 14-quarter low
Chinese outbound real estate investment fell 51 percent year-over-year to $2.5 billion during the third quarter, the lowest total in 14 quarters, according to Cushman & Wakefield's recent report "China Outbound Investment." The decline came amid new outbound investment restrictions and investor caution prior to the 19th Party Congress meetings in Beijing.
Development sites won out by a wide margin, recording a 58 percent share of Chinese outbound investment by asset category and raising the sector's cumulative total to $8.4 billion thus far in 2017, skyrocketing 234 percent y-o-y. At a 28 percent share ($710 million), the office sector plunged 83 percent q-o-q to the lowest quarterly investment total in more than three years.
"In line with previous forecasts, overseas development sites have quickly emerged as the top asset category for Chinese investors," said James Shepherd, managing director of Greater China Research, Cushman & Wakefield. "While the share of investment into this asset category has surged from as low as 10 percent to 58 percent since 2016, there has been a pronounced swing in the opposite direction for overseas office investments, whose share over the same period fell back from as high as 71 percent to 28 percent."
Australia took first place by destination as investors targeted development sites in particular at a 63 percent share ($783 million) by asset category. Development sites also accounted for the overwhelming share of investment into second-place United Kingdom and Hong Kong, which fell to third place. Canada ($194 million) snuck into fourth place as investors deployed only $192 million into the United States, which dropped three places on the quarter.
Francis Li, head of investment & advisory services, Greater China, Cushman & Wakefield said: "Ahead, the outlook for Mainland Chinese participation in overseas real estate markets is quite uncertain over the short term and will be heavily reliant on Central government approvals of any proposed deals. Given the immense scale of Chinese property developers (5 of whom are now listed on the Global Fortune 500 list), it would seem that there is now, more than ever before, a compelling business case for a prudent re-balancing of their development portfolio with an allocation of funds to projects across global markets."
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