Wealthy Chinese could invest ¥1.1 trillion in overseas real estate

PUBLISHED : Wednesday, 17 July, 2013, 12:00am
UPDATED : Wednesday, 17 July, 2013, 4:19am

Wealthy mainlanders are lining up to invest as much as 1.1 trillion yuan (HK$1.38 trillion) in real estate markets overseas, according to international property consultancy CBRE. About five per cent of the investable assets of mainland high-net-worth individuals (HNWIs) could be invested, said CBRE in a report.

HNWIs are individuals with investable assets of over 10 million yuan.

By last year there were over 700,000 mainland HNWIs, with a total of 22 trillion yuan in investable assets - or some 31 million yuan each on average, CBRE said.

Given the current asset scale, investment preferences, and tendencies of HNWIs, CBRE research estimates that approximately 5 per cent of their investable assets could be allocated to overseas real estate markets.

The traditional preferred destinations for immigration and overseas study, including the United States, Canada, and Australia, are expected to remain the primary choices for mainland Chinese individual investors, given the supply available in these markets, together with comparatively lower prices and a lower likelihood of policy regulations covering inbound investment in local properties, it said.

The interest in offshore properties from HNWIs in mainland China was driven by a desire to diversify wealth preservation and creation, as well as migration trends and the practice of sending their children to study overseas, noted CBRE.

Added factors were the presently subdued performance of domestic stock markets and the austerity measures imposed on the domestic residential market. This trend has been further supported by the continued appreciation of the yuan.