Chinese Investors Eye Overseas Property Amid Market Slump

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Chinese Property Buyers Look to International Investment

According to international real estate group Juwai IQI, Chinese property investors are once again looking overseas for investment opportunities. China’s prolonged lockdowns have finally been lifted, but the domestic property sector faces challenges due to stricter banking regulations, a sluggish economy, and a significant oversupply.

Amid this slowdown in the Chinese property market, financially capable Chinese buyers are increasingly drawn to overseas investment options. In particular, investors are attracted to foreign real estate for a number of reasons, including buy-to-let property in the UK.

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Why are Chinese Investors Drawn to Overseas Property?

Juwai IQI commented that real estate appeals to Chinese investors due to its “clear and tangible nature”. As a long-term investment, it also provides returns through capital appreciation and long-term income in the form of rent in a non-Chinese currency independent of domestic economic fluctuations.

Juwai IQI group CEO Kashif Ansari said:

“In the current landscape of rising interest rates, those Chinese investors equipped with readily available capital hold a distinct advantage over local buyers.”

He also highlighted a surge in immigration opportunities in affluent countries as a factor in further piquing interest from Chinese investors to explore options beyond their home country.

According to Knight Frank:

“For years, property has been the favoured asset class for wealth accumulation for the Chinese, with many investing as much as 70% of their savings in real estate, both domestically and internationally.”

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Why is the Chinese Property Market Slowing Down?

As mentioned, the Chinese property market is currently facing a challenging climate. Tougher banking regulations, a subdued economy, and an oversupply all have negative consequences for Chinese property developers.

Some of China’s most prominent developers are currently on the brink of collapse, grappling with these challenging market conditions.

Chinese buyers are experiencing a desire to look overseas for real estate opportunities, driven by the ongoing recovery in international travel post-lockdown and substantial savings accumulated during the pandemic. We highly recommend our readers read our guide answering questions such as Can foreigners buy property in the UK?

UK Among Top Choices for Chinese Real Estate Investors

Knight Frank states that in the late 2010s, Chinese investors from the middle classes would often opt to invest in apartments in Southeast Asia, while buyers with more capital to spare went for Australia, the UK, and the US.

However, due to the property crisis at home and subdued growth in the economy, Chinese investors are taking a more selective approach. Southeast Asia has fallen out of favour, and more affluent countries are taking the spotlight.

Chinese investors regularly top the list of overseas buyers in UK property, and according to the ONS, buy-to-let properties in London are a popular choice. They report that Hong Kong and mainland China investors invested £7.69 billion in London property in 2019.

Further Reading: To learn more about the UK property market, take a look at our dedicated buy-to-let area guides covering topics such as available investment property in the city of Westminster and investment property available in Chelsea.

Author

Jessica Ferris

Jessica is a property content writer at RWinvest. Keeping a close eye on the UK property market, Jessica helps our readers stay informed and up to date on the latest market news and statistics.