Foreign investors turn cautious on China’s property market as slowdown, political risks cloud outlook
- Purchases this year have trailed the monthly pace seen in the past two years as US-China ties deteriorate and diplomatic row escalates
- Shenzhen remains a favourite city despite the slower transaction volume
They spent about 27.1 billion yuan (US$3.88 billion) on such assets this year as of June 30, the property consultancy said in a report. The 4.52 billion yuan monthly flow trailed the 6.76 billion yuan and 8 billion yuan pace recorded in 2019 and 2018, respectively.
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The cooling sentiment also came on the back of a historic slump in China’s coronavirus-ravaged economy in the first quarter, which drove office vacancy rates in Beijing, Shanghai, Guangzhou and Shenzhen to all-time highs while shopping mall rents nosedived. The economy has since rebounded 3.2 per cent last quarter.
“Some investors, for example funds based in the US or the UK who are not familiar with the quick recovery of China’s consumption-driven economy, are taking a wait and see approach,” Yip said.