China’s overseas property binge is over for now, but watch for pockets of activity

Overseas real estate investment by large Chinese companies is likely to stay muted this year, amid tightened regulatory scrutiny, although buoyant activity may emerge from some smaller players, according to real estate consultants.

Knight Frank executive director Paul Hart said the government’s regulatory reviews on some of China’s biggest offshore asset buyers, including Anbang, Fosun, HNA Group and Wanda, have put the brakes their overseas acquisitions plans, while also sending a chill across the broader corporate community.

“Those reviews are in the short term impacting the decisions of some of the larger conglomerates, particularly in the insurance sector,” he said.

Non-financial outbound direct investment by Chinese companies fell 45.8 per cent year on year to US$48.19 billion in the first half, according to Ministry of Commerce data released earlier this month. In June alone, outbound investment dropped 11.3 per cent from a year earlier to US$13.6 billion.

Chinese foreign investment in industries like property, hotels, cinemas and entertainment have dropped 82.5 per cent year on year, the ministry noted.

Deals by Chinese companies in the hotel, property and entertainment sectors surged 233 per cent year on year in 2016, reaching US$15.86 billion across 33 different transactions, according to consulting firm Mergermarket.