China’s property buying spree in overseas markets hit by capital controls
Chinese offshore property investments fall to US$3.4 billion during first three months of this year
Tighter controls on capital outflows has cooled the surge in outbound property deals by cash-rich Chinese companies , analysts said.
“We originally expected this year’s outbound real estate investment to show explosive growth, but that did not happen,” Paul Guan, a partner in the real estate practise of global law firm Paul Hastings, said.
Chinese offshore property investments fell 30 per cent on year to US$3.4 billion in the first quarter, compared with a 35 per cent growth during the whole of 2015, according to data from global property firm JLL.
More Chinese companies are actively seeking to diversify their assets by making investments overseas, especially in the property sector, after the yuan started depreciating in August.
But they face increased hurdles to take money overseas as deals are subject to closer scrutiny by China’s foreign exchange regulator which wants to avoid short-term exchange rate fluctuations.
“This did impact investment confidence,” Guan said, adding that regulators are paying more attention to details, such as whether the target property is overpriced and are also monitoring investors’ track record in overseas acquisitions.