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Why More Chinese Super Rich Are Investing in Overseas Property


Why More Chinese Super Rich Are Investing in Overseas Property

 The recent stock market crash in China has seen many super rich Chinese investors take their money out of the stock market and buy overseas properties. Indeed, there has been a massive outflow of wealth from China into Europe, Australia and US recently. So, if you are looking to sell overseas property, then your best chances are with Chinese investors.

How big was the stock market crash? Well, it was massive – and reversed several years of economic growth achieved by China. As a Chinese investor explained on the social network WeChat, "This is a stock market disaster that has wiped out middle class wealth accumulated over a decade of hard work, and this is a stock market disaster that has deprived a whole generation of their Chinese dream."

The scale of the stock market crash has led the average Chinese investor to the overseas property market, in an effort to diversify their assets outside the country. More Chinese rich are investing in real estate abroad as well as in fixed-income.

The Chinese were the biggest foreign buyers in the United States in 2015 by far, buying properties worth over $28.6 billion in the country. In comparison, Canadians, who have always been big buyers of US housing market, came second with just $11.2 billion.

Most real estate brokers in the US have identified Chinese investors as their principal targets and in fact already sense an urgency from their Chinese clients to buy more properties in the US before the yuan devalues any further – which would decrease their buying power considerably.

As Emma Hao, a broker for Douglas Elliman says,  "Because they are insecure about the economy and the politics, with the RMB devaluation, the stock market got mashed, and the real estate in China is a big bubble - there is nowhere to go."

A lot of Chinese super rich have their children studying in US colleges and are desperate to diversify their holdings. As Andrew Wu, an estate agent at Daniel Gale Sotheby, who mainly sells to Chinese homebuyers looking for real estate in the US,  says,  "They're looking for a safe haven, and the real-estate market has always been looked upon as a safe haven for Chinese buyers."

Australia is another country which is being keenly watched by Chinese buyers. Already, Chinese investors have bought properties worth $10.5 billion in Australia in 2015. Real estate agencies in London, as well as those in other top European cities such as London, Paris and Barcelona have reported a surge in demand from wealthy Chinese, looking for a safe haven from China’s stock market disaster.

Real estate analysts predict that more wealthy Chinese would be pumping money in European properties in 2016. Tom Bill of Knight Frank LLP says, "There is anecdotal evidence that Chinese buyers have intensified their interest in global property markets, including London, as a result of the recent stock market volatility.”

This point is echoed by Brian O'Connor of Adhoc Immobilien, a Berlin based real estate agency: "The whole (Chinese) market is precarious, so people would like to spread their risks and enter different markets.”

Indeed, the Chinese interest in European property has been growing for the past two-three years, and it is at a high now, because of the stock market crash. As Sebastian Fischer of the German real estate agency Engel & Voelkers explains, “European property has always been a well-functioning asset and is highly attractive from a Chinese portfolio management standpoint. Interest has risen due to the weaker euro and insecurities on Chinese stock markets."

Spain is another country that really interests Chinese investors. As Paloma Perez Bravo, an estate agent at the Engel & Voelkers office in Madrid, says, "Three percent of overseas buyers were from China in 2013. The following year it was 3.4 percent. We don't have the statistics for this year yet, but we expect it to be about 4 percent. So Chinese buyers are increasing year-on-year. In Q2 this year, we had many Chinese buying houses in Madrid. In Q4 2014, it was a very good time, as a lot of Chinese people came to ask about properties."




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