Chinese developers flooding international real estate markets

Over the last decade, there has been a trend of Chinese home buyers looking to build in western countries. In 2015, Chinese developers held an estimated $5 billion value in the Australian real estate market. Now there is also a noticeable amount of developers moving in from Middle Eastern countries.

Popular destinations for Chinese buyers include London, Sydney, Vancouver and Hong Kong. Chinese holdings of global real estate, including commercial properties, are expected to increase to $220 billion by 2020 from $80 billion in 2015, according to Juwai.com.

“The Chinese have managed to accumulate very large amounts of wealth, and the opportunities to deploy that capital in their own market are somewhat restricted,” said Richard Barkham, the London-based chief global economist at CBRE Group Inc., the world’s largest commercial property brokerage. “China has more than a billion people. Personally, I think we have just seen a trickle.”

These restrictions have forced residents to venture from the borders to outside nations with more available land at a cheaper cost. Asian markets have become increasingly competitive over previous years which is now showing in the figures. Singapore’s real estate market saw sales of 1,252 units last month, compared with 509 units in September. This is the highest figure since July 2015.

It does not help that property value in Singapore has reduced 11% since its peak in 2013. Studies in 2015 concluded that Hong Kong was the most affordable city to live in, while Singapore took 27th place.

“Properties in Shanghai are ridiculously expensive,” Chen Feng, 38, said as he evaluated prospects at a property fair in Shanghai in September, lured by television commercials for the event the night before. “With the amount of money it takes to buy a small apartment here, I can buy a building of apartments in many places in the world.”

At the same time, property value has been steadily increasing in the U.S and Australia over the last few decades, providing a great opportunity for buyers and residents.

Expansion is expected to continue in the next five years from Asian developers as well as an increase in developers from the Middle East, Saudi Arabia being especially notable. Fang Holdings Ltd. Is expecting a 130% increase in buying over the next year alone. Keep a look out for opportunities this growth may present in the stock market — talk to a top brokerage such as GSI Markets today.

To learn more go to: Forex

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