Deepening cracks in China’s housing market mean the country’s major investors are looking elsewhere for new opportunities.
Property investment has slowed down as bank funding tightens up. It accounted for around 12 per cent of China’s gross domestic product (GDP) in Q1, down from 15 per cent last year, according to Reuters.
Although commercial real estate failed to put up impressive numbers in the first quarter of 2014, Chinese investors still spent over $1 billion on properties located outside of their home country.
An important component of their first-quarter investments this year has been the use of joint ventures and foreign partnerships to buy properties.
One example of this concept was a deal in March, where China Cinda Asset Management and U.S. based Zeller Realty Group were joint purchasers of a 65-storey office building in Chicago for over $300 million.
According to the Wall Street Journal, this deal was the largest-known investment by a Chinese company in U.S. commercial property outside of major cities on the East and West coasts.
Darren Xia, the director of international capital group (IGA) at JLL China, commented recently that his firm expects that interest and activity from “equity-rich Chinese investors” in foreign markets will continue to increase throughout the remainder of the year. As a result, it is possible that the total amount spent outside the country could exceed $10 billion.
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