New | China's yuan devaluation to speed up outbound real estate investment
Surprise currency devaluation will see rich Chinese speed up decisions to buy property in developed markets in bid to protect wealth
The unexpected devaluation of China's yuan is likely to accelerate buying interest for overseas property among mainland Chinese to protect their wealth, but capital will shift away from emerging markets to avoid rising currency risks.
Despite the fact that owners of Asian properties have seen their wealth sharply reduced by an escalation in currency risks in the region, industry experts say there has not been any panic selling yet.
"Mainlanders mostly buy overseas homes for immigration, for their children who are studying overseas or as holiday homes. They will be unlikely to sell in haste unless big problems arise with that country's property market such as political unrest," said Thomas Lam, the head of valuation and consultancy at Knight Frank.
On Monday, Morgan Stanley identified South Korea, Thailand and Singapore as three of the "troubled 10" countries whose currencies are at risk since China devalued the yuan.
The yuan has lost 3 per cent against the US dollar since the People's Bank of China shocked the markets by devaluing the currency by 1.85 per cent on August 11, the most in a single day in more than 20 years. Some regional currencies also extended their falls to this week, triggering concerns about a currency war in Asia.
During the past week, the Singapore dollar dropped 1.75 per cent, the Korean won lost 1.67 per cent, while the Thai baht was down 1.26 per cent against the greenback.