Chinese property investors scale back overseas acquisitions

Overseas acquisitions by Chinese firms are expected to slow down after the Chinese government sent out a clear signal of their intent to curb overseas investment in property, reported South China Morning Post.

In fact, Dalian Wanda had scrapped its plan to acquire London’s Nine Elms Square site for £470 million (S$818 million).

This comes after the Chinese government unveiled plans to restrict overseas investment in various areas including hotels, the film industry and other forms of entertainment, sports clubs and property. Investors looking to venture in these areas are required to obtain special approval from regulators.

Famous for being big spenders in the global property market over the last four years, Chinese investors’ most favoured overseas destinations in 2016 include the United States, Australia and Hong Kong.

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But given the intense government scrutiny that they are in, Chinese property investors shift their focus back to the domestic market.

The retreat saw mainland Chinese firms’ outbound property investment plunge 82 percent year-on-year in 1H 2017. Morgan Stanley even expects it to drop further to 84 percent for the whole 2017. Total investment for last year stood at US$10.6 billion (S$14.4 billion).

Despite this, others still believe that the restrictions would have limited impact to related markets, which will continue to be shaped by broader macroeconomic fundamentals and trends.

Moreover, Chinese firms looking to invest in property may continue to issue debt or equity via offshore platforms given that most of them had already moved currency overseas, noted Ben Briggs, Briggs Freeman Sotheby’s International Realty’s executive vice-president.

“They will just do the investments in a more quiet and sophisticated way.”

This article was edited by Denise Djong.