Red-tape cut tipped to boost China’s outbound property investments

Outbound property investment from China may set a fresh record this year after Beijing's move to simplify approvals, according to Cushman & Wakefield, the world's largest private real estate consultancy.

James Shepherd, the head of research for Greater China, said the tally this year could exceed the record US$15.8 billion last year as a number of expected big deals was in the pipeline.

In the first half of this year, he said, outbound investment was about US$5.1 billion, nearly as high as the total for 2012.

"We are aware of a number of major transactions under negotiation at present. If these close by the end of the year, we could see a new record," Shepherd said. "In China, we have frequently seen foreign investors under time constraints to close by year-end, so there is every reason to think that Chinese investors have similar pressure. Certainly there have never been as many major individual Chinese investors active in overseas real estate deal sourcing as we see at the present time."

Measures from the Commerce Ministry that came into effect this month allow domestic firms to invest overseas without prior approval, although they must first register their investment with the authorities. Only investments in sensitive industries or countries will require approval.

Shepherd sees the new measures as a huge endorsement by Beijing of overseas investment by Chinese firms. Moreover, they would put Chinese investors in higher regard overseas, he said.

"International investment markets move quickly and buyers that carry lengthy approval process baggage will often find themselves penalised and considered unattractive purchasers," he said.

However, Shepherd said Chinese investors faced an array of challenges in going global. "These take the form of government controls on capital flows, talent shortages, differences in cultures and unfamiliarity with foreign legal and regulatory environments," he said.