Chinese capital floods European property investment markets

on Mar 6, 2015
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The combined effect of a fall in value of the euro and a slowing in the growth of real estate values in the Chinese property market has led to strong interest from Chinese speculators in European real estate, property agents have said.

The investors coming from China range from private individuals to institutional investors with large capital resources. In particular, there has been a surge in Chinese interest in European commercial property with annual yields currently at five percent in some cities.
Countries such as Spain and Portugal have seen a marked increase in interest coming from China. Eager to encourage international capital back into their collapsed real estate markets, both countries have offered residency visas for those willing to invest a minimum amount of money and the Chinese have been quick on the uptake

For example, Portugal has been very active in granting residency to non-European investors. In the past two years, Portuguese authorities issued 1,775 residency permits to investors who spent at least €500,000 on property. Of these, 80 percent were Chinese.
Zhang Kesong, a Beijing-based agent who helps speculators buy into the European property market, said the euro’s fall had encouraged more clients to head to Europe on investment scouting missions.

Zhang said one investor bought 11 flats in the Spanish city of Almeria for €2 million, with the goal of turning them into a family hotel and making a 10 percent profit.
“The falling euro has significantly slashed the cost of travelling to and investing in Europe, and more people are tempted to invest there,” he said.
Knight Frank said Chinese overseas property investment grew 25-fold to £10 billion from 2009 to 2014, with Australia, the United States and Britain the top destinations.
Property consultancy Savills meanwhile estimated that mainland institutions poured close to £9 billion into the sector last year, more than double the 2012 total.

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