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Chinese spend on foreign property will slow in 2017, still likely to crack $AUD 100 billion

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Juwai, the largest Chinese-based global property site, has released its Chinese Global Property Investment report.

The report reveals that 2016 was a record year for Chinese investment in foreign property with a total of $AUD 126.6 billion spent, up 845% over the past five years and a 25.4% growth from 2015.

Topping the list in 2016 was the U.S., with Chinese spending more than $AUD60 billion on American real estate.

Australia came in second, followed by Hong Kong, Canada, and the U.K., which rounded out the top five.

The report forecasts that 2017 will see a potential decrease in Chinese property investment due to new restrictions on foreign investments in certain countries such as Australia, and new regulatory measures within in China itself.

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Chinese property investment in 2017 may not be as big as in 2016, but it will still be a significant amount.

“Current trends suggest that Chinese property investment this year will be on par with the levels of 2015, or about $80 billion [$AUD 100 billion]”, said Juwai Chief of Operations Sue Jong. “That would make 2017 one of the top two or three years in history. So, while levels are lower than in 2016, they will still be extremely high by any standard.”

Another factor worth noting is that while we may think of Chinese as massive overseas property investors, when compared with other countries, China is in fact underinvested in property abroad.

According to Juwai, China ranks 18th in the world for aggregate ownership of foreign real estate and other assets compared to GDP. With a spend of 12% of GDP, that puts China well below the Organisation for Economic Co-operation and Development (OECD) countries’ average of 42%.

“We believe we estimate conservatively when we forecast that Chinese investors will acquire more than $1.5 trillion of overseas assets in the coming decade or so as they close the underinvestment gap. Up to half this new investment could go to property,” added Jong.