BEIJING, Dec. 21 (Xinhua) -- More and more Chinese real estate developers turned their eyes towards overseas property market, as Chinese government embrace increasingly drastic measures to curb the overheating real estate market.
Insiders expected that Chinese developers will expand their business abroad in the short and medium term. But meanwhile, Chinese developers are engaged in fierce competition and have an urgent need to step up transformation.
Many analysts pointed out that global economic situation, exchange rate changes and the cyclical adjustment of real estate industry are the main driver for Chinese developer to invest in overseas market.
Chinese companies showed remarkable growth in international mergers and acquisition (M&A) market both in number and value in the first three quarters of 2016, said the latest report of PwC.
According to the report, the number of deals reached a record of 671 and the value of the transactions totaled 160 billion US dollars. In terms of investment area, real estate industry became investors’ first choice to conduct overseas M&As.
Taking Malaysia as an example, many Chinese real estate developer, including Country Garden, Greenland Group, R&F properties and Agile Group Holdings Limited, are speeding up their expansion in Malaysia. Country Garden, China’s third-largest home builder by sales, planned to invest overall 100 billion US dollars in Malaysia in 20 years to create the world's most advanced smart city.
Chinese outbound real estate investment volume reached a total of 257.34 billion US dollars in 2015 and is expected to jump 37 percent year on year to reach 35.3 billion US dollars in 2016 , DTZ/Cushman & Wakefield, a global leader in commercial real estate services, said in a report.
According to DTZ/Cushman & Wakefield, Chinese real estate enterprises tended to select mature markets as their destination of choice. By value, 97 percent of the transacted amount through the first eight months of 2016 was limited to five markets: the U.S., Australia, U.K., Hong Kong and Canada . The U.S. held the top slot for overseas capital allocation by Chinese investors.
Chinese real estate companies are unsatisfied with the traditional residential sales, but they are willing to combine Chinese industries and technology to implement the “going out” strategy in a bid to realize the common development.
Concerns about the market slowdown in China and the devaluation of the Yuan led Chinese investors to seek a safer investment environment . In the future, a growing number of Chinese investors, including China’s small and micro-sized enterprises and individual investors, will make investment in overseas property market, said Wang Rao, assistant director of Beijing investment department with Savills Co.
As the Chinese developers become increasingly experienced in overseas property management and operation, they will likely expand their horizon to growing markets, such as Southeast Asia and BRICS counties. Real estate markets in countries along the Belt and Road are still in the early stage of development , which will offer higher potential returns, said Liu Lihong, senior director with JLL China, adding that Chinese real estate developers could use their experience to help countries along Belt and Road to explore the development of real estate market. Enditem (Edited by yang yifan, yangyifan@xinhua.org)
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