Chinese investors are likely to buy $20 billion worth of properties overseas in 2015, up 21% year-on-year, forecasts Jones Lang LaSalle.
Chinese overseas investment in real estate was nearly $16.5 billion in 2014, a 46% increase compared to the previous year. Apart from the domestic real estate buyers, property developers and insurers are behind this overseas buying spree, experts say.
In 2012, the China Insurance Regulatory Commission allowed insurance companies to invest in real estate outside of mainland China and Hong Kong, which has prompted them to move their assets overseas.
"The easing of restrictions over the last a few years by the Chinese government has (made it) ... much easier for institutions as well as individuals to move money overseas," said David Green-Morgan, the Singapore-based head of global research for International Capital Group at JLL.
Ping An Insurance Group's acquisitions recently included the Tower Place office block in London for £327 million and Lloyds of London. Anbang Insurance Group has entered is buying New York City's Waldorf Astoria hotel for $1.95 billion. Real estate accounted for 20% of total investment made by insurance companies overseas.
Europe was the number 1 choice for Chinese investors, with total property investments of $5.5 billion in 2014. London is the favourite city for Chinese buyers, but they are also investing heavily in properties in Portugal and Spain. Chinese buyers have also become the largest source of foreign cash in the U.S. residential real estate market. Australia is another favourite property buying destination.
In China, new home prices fell in 69 of 70 cities in the first nine months of 2014, compared to the same period in 2013, with an average price decline of 5.1% based on data from the National Bureau of Statistics (NBS).