Date
15 December 2017
London is one residential housing market attracting interest from Chinese investors and developers. Photo: Bloomberg
London is one residential housing market attracting interest from Chinese investors and developers. Photo: Bloomberg

A new shore thing for Chinese investors: Overseas property

It took Li Yin less than an hour to sign on the dotted line after coming across the luxury residential development on a trip to Malaysia. Li, the owner of a small factory on the mainland, told the Economic Observer that the seaside villa was her sixth overseas realty foray since 2010, adding to the homes she has bought in South Korea, Singapore, Britain, Canada and the United States.

The report did not say how many homes she has but on a shopping spree in London at the end of last year she splurged on four spacious rental flats and a villa in the suburbs for her son when he goes to Britain to study.

Most of the money for the investments came from selling her Beijing properties back home. Li said home prices in the capital still have room to rise in the long term, but the entire market is stuck for the moment. She also aims to shed her portfolio in second- and third-tier cities to fund her bold moves abroad.

Li is not the only person to sell up and ship off. Figures from the National Statistics Bureau present a gloomy picture — the nation’s aggregate contractual home sales suffered a rare 5.2 percent year-on-year drop during the first quarter. And homes on Beijing’s secondary market were 3.8 percent cheaper on average in April than a year earlier.

A cooling market and ongoing bans on mortgages for second homes keep more buyers on hold while others simply call off their plans.

Shrewd people like Li sensed a change in the wind last year when Beijing’s exorbitant home prices raised not just a few eyebrows among top policymakers. She had bought a small condo in Beijing’s bustling Chaoyang district for 1.5 million yuan (US$240,500) early on in 2013 and sold it for 2.2 million yuan before the year was out. It would largely be unsellable now.

The five London homes Li bought last year were worth 30 million yuan in total, but she only needs to make a 10 percent down payment to get her name on the deeds. New homes in London are always in short supply so it should come as no surprise that within just two months, the price of a flat she bought has risen from 2.8 million yuan to 3.2 million yuan.

The report said that rent on one of Li’s flats near central London’s Marylebone train station has risen from 12,000 yuan to 15,000 yuan per month. Excluding loan repayments, tax and property management fees, she is assured of a monthly return of no less than 10,000 yuan.

Chinese developers have been quick in following their customers. Developers spent US$7.6 billion overseas last year, a 124 percent year-on-year increase, according to a Jones Lang LaSalle report. Frontrunners like Greenland, Country Garden (02007.HK) and Vanke (200002.CN, 000002.CN) have all gained footholds in various countries including Singapore, Malaysia, Australia, Germany, Britain and the United States.

Many of these firms offer one-stop services to help their compatriots avoid tax and exchange rate risks.

– Contact the writer at [email protected]

SK

EJ Insight writer

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