China's QDII2 will increase outbound investment by domestic capital

China's qualified domestic individual investor (QDII2) scheme will further encourage outbound investments as the new programme will raise the investment ceilings for individuals and institutions, according to property consultancy JLL.

The scheme will have varying degrees of impact on different parties. For a select group of individuals, QDII2 could give them the option of investing up to half the total value of their assets in international financial assets such as real estate, JLL said in its latest report on the programme.

"This will be a significant step up from the previous programme which limited individual investments to US$50,000 per annum," it said.

To qualify, it is likely that individuals will need to be an employee of a company located in a free-trade zone and have assets of at least US$160,000.

"This may have a significant impact on sectors such as wealth management and securities, allowing them to structure outbound real estate investment products through this new rule," the report said.

For institutions, QDII2 will raise their investment ceiling from US$300 million to up to US$1 billion.

JLL said individual investors would have greater investment capacity, allowing them to be a part of an investment pool that could be used to fund multimillion-dollar purchases in top cities such as New York, Sydney and London.

A domestic insurance company recently used a pooled yuan fund from individual investors to gain additional leverage and maximise its returns on its overseas office acquisition, it said.

It is expected that the new scheme may be rolled out this year, with Shanghai, Tianjin, Chongqing, Wuhan, Shenzhen and Wenzhou rumoured to be among the first in line to introduce the programme.