Western Property Markets Look Set For An Influx Of Chinese Investment
Investment analysts are predicting that the recent problems reported on the Chinese stock market may lead to a sharp increase in property prices in developed countries such as the United Kingdom, Australia and the United States. Since June of this year, Chinese stocks have slumped by over 40% and there are fears that the worst is yet to come.
With trillions of dollars worth of value being wiped from the market’s overall value, Chinese investors are beginning to see that their money may not be safe if it is simply placed in a bank at home. With the renminbi (the official currency of the People’s Republic of China) being devalued sharply, their concerns certainly hold some weight.
Local Investors Are Looking Elsewhere
These fears have led to local investors looking elsewhere for more solid long-term investment prospects, and one such market is overseas property. Chinese investors are now viewing the international property market as a far more secure way to grow their wealth than leaving their money in the hands of the Chinese government, and some are utilising property investment services in the capital to source suitable investments. This is good news for the UK property market and property investors alike.
While it is true that Chinese investment is nothing new in the property markets of major cities such as New York, Sydney and London, it would now appear that they are willing to broaden their horizons and look elsewhere for further investment possibilities. Countries such as Poland are being placed under the microscope of these investors and other markets in Europe are also being closely scrutinised.
Despite the current turmoil surrounding the Chinese stock market, Chinese investors are still global players, and their money is expected to send property values skyrocketing in new areas of concentrated interest should they choose to expand their already considerable reach.
Chinese investment already accounts for over 25 per cent of all London home purchases, while in Australia, investment from the People’s Republic is expected to double over the next few years to somewhere in the region of $60 billion. This extraordinary purchasing power is being felt in the United States too, where Chinese investors are already the leading foreign purchasers of residential buildings, according to the National Association of Realtors.
Limited Options At Home
Much of the current swathe of investment is thanks to the limited opportunities that those with the capital to invest have in their own country. Many local investors now see China as a risky option and the thought of investing elsewhere is growing in both appeal and popularity.
Those who choose to go down the route of overseas property investment do, however, have a number of hoops that they need to jump through in order to get the deals that they want. Not least is the current government restriction on the amount of money that individual investors are allowed to move out of the country.
Individual investors can only transfer a maximum of $50,000 out of China at present, but as the old adage goes, ‘where there’s a will, there’s a way’, and many are now seeking approval to send ever larger sums of money abroad. It is thought that this limit is to be lifted, but no fixed date has been given at present.
The volatile situation seen on the Chinese stock market over the last few months is sure to fuel this desire to invest overseas even further, so it will be interesting to see what happens to the property markets in the west over the coming months and years.