HONG KONG (Reuters) - China’s institutional investment in property overseas rose 17 percent in the first six months of this year, with residential investment surging 84 percent, real estate services firm Jones Lang LaSalle (JLL) said on Wednesday.
The gains come as Chinese investors pursue opportunities outside their home turf, where the outlook for the real estate sector is overshadowed by issues such as tight financing and high inventories which are weighing on prices.
London was the most popular destination for Chinese institutional investors, with a total of $2.3 billion (1.35 billion pounds), as efforts by the city to draw Chinese capital into major infrastructure projects spilt into residential and commercial markets, JLL said.
San Francisco and Chicago followed with $548 million and $365 million, respectively.
Sydney was fourth, followed by Madrid, after China’s largest commercial developer Dalian Wanda bought a historic skyscraper in Spain’s capital city from the nation’s largest bank, Santander, $361 million.
“For first-time overseas investors it makes sense to target the most liquid cities, but for the more experienced, looking at smaller less liquid markets like Spain where yields are higher but so are the risks, it is a natural progression,” David Green-Morgan, JLL’s global capital markets research director said in a statement.
Chinese real estate outbound investment totalled $5.4 billion during the period, with commercial investment contributing $4 billion.
JLL noted that developers and insurance companies remained the most active investors, and while the interests mainly focussed in core office and mixed use development projects in global gateway cities, there was an increasing interest for hotel and hospitality products in popular Chinese tourist destinations.
The introduction of the Golden Visa in many southern European counties has also raised the profile of these locations among Chinese mainland investors, it added.
Separately, on retail investments, the United States was the country most favoured by Chinese home buyers, according to Juwai.com, the largest real estate portal that targets Chinese buyers looking abroad, based on inquiry data from the first half of 2014.
Australia ranked second and Canada third, even though it cancelled the Immigrant Investor Program in February. The UK was fourth.
“We have not seen any measurable impact on Chinese demand for property in Canada as a result of the ending of the investment visa programme,” Juwai.com’s co-chief executive officer Andrew Taylor told Reuters.
Reporting by Clare Jim; Editing by Kim Coghill