Chinese investment in overseas property soars

From 2009 to 2014, the total value of Chinese overseas investment volume skyrocketed from $0.6 bn to an estimated $15 bn, reports Knight Frank. The primary focus of this surge has been Australia, the US and the UK.

Indeed, capital outflow from China into the three countries multipled five times compared to 2012. In 2014, that trend continued, with investment from China Down Under soaring 60 per cent year-on-year.

"We expect the transaction volumes from Chinese investors into these three markets to match or even exceed that of last year," adds Neil Brookes, Knight Frank's Head of Capital Markets for Asia Pacific.

While core office properties in Gateway cities have proven the most attractive assets, though, investors are beginning to turn away from commercial real estate to residential opportunities, reports Knight Frank.

Investors are also looking to diversify geographically moving from Gateway locations into higher yielding leading provincial cities.

David Ji, Director, Head of Research & Consultancy of Greater China at Knight Frank, adds: "Many provincial cities in key countries including Australia, the US and the UK have now presented a better yield spread (i.e. the gap between yield return from property investment over bond returns) than Gateway cities of London, New York, Sydney and Melbourne."

Thomas Lam, Senior Director, Head of Valuation & Consultancy at Knight Frank, highlights new investment opportunities and hot spots around the globe, such as Johor Bahru in Malaysia, Gold Coast in Australia, and Los Angeles and Miami in the US.

"All these hot spots present investors with higher yields than traditional overseas investment locations like London, New York and Sydney," he comments.

"Compared with key Chinese Gateway cities such as Beijing and Shanghai, a number of recent investment hot spots have shown a discount in prime residential prices. For example, Los Angeles and Miami prime apartment prices are both about 25% lower than Shanghai, drawing significant interest from HNWIs in China."

Photo: Knight Frank China report