Hong Kong ranks second in cross-border investments, attracted US$13.26 billion in 12 months until June

Hong Kong has moved up 14 places to emerge as the second favourite destination globally for cross-border investment after London, according to an annual report on global commercial real estate investment activity published by Cushman and Wakefield on Thursday.

The city has benefited from Beijing’s capital controls, which encourage mainland Chinese investors to concentrate their real estate allocations closer to home. The city was the second-largest destination for mainland investment last year, attracting a record US$8.57 billion, up by 61 per cent year on year, according to Knight Frank. The cross-border investment it received on the whole in the 12 months ending in June surged by 259.4 per cent to US$13.26 billion.

Asians still viewing London as property investment hotspot

“For mainland investors, Hong Kong is a more convenient location for handling their bank affairs, than other places like the US, and it uses a language they know,” said Chong Tai-leung, associate professor at the Chinese University of Hong Kong.

Chong added that the trend was likely to continue because Hong Kong enjoys a free flow of capital – it can attract foreign investors and does not prevent capital outflows.

Catherine Chen, a researcher at Cushman, said approvals are easier for mainland investors when they are buying property in Hong Kong, than in other places. Sometimes, all it requires is that funds be “transferred to the companies’ branches in Hong Kong”, said Chen.

Real estate was Chinese investors’ favourite form of foreign investment. And while they were responsible for the third-highest volume of international real estate investments, cross-border flows only made up 7 per cent of total Chinese investment, as investors chose instead to spend domestically, according to the report.