China’s overseas commercial and residential property investments hit a record US$33 billion in 2016, an increase of nearly 53% year-on-year, according to the latest data from property services firm Jones Lang LaSalle Inc (JLL).
The hotel and industrial sectors showed the largest increase in 2016 due to several major transactions in the U.S. involving hotel and office property portfolio sales and Chinese appetite for industrial parks.
"Hotel activity last year was boosted by the purchase of Strategic Hotels and Resorts by Anbang Insurance for over US$6 billion," says David Green-Morgan, JLL’s Global Capital Markets Research Director. "China Life Insurance has secured assets across the hotel and office sectors with portfolio purchases from the Starwood Capital Group and an office tower in Manhattan; sovereign wealth fund Chinese Investment Corporation has been active in the office sector in New York as well."
Land acquisitions by Chinese investors made a comeback last year, up 44% following significant transactions in Hong Kong, Australia and Malaysia.
"We do believe that Chinese investors will continue to be major movers of capital into global real estate for many years to come," says Green-Morgan. "But a similar increase in 2017 may be challenging given the recent discussion about China monitoring its capital outflows."
Chinese investors also increased their share of domestic property transactions. They accounted for more than 86% of transactions in China in 2016, up from about 75% over the past few years.
China’s tier one cities were most attractive to these investors, according to Johnny Shao, Head of Capital Markets for Shanghai and East China at JLL.
"Total transaction volumes in Shanghai reached US$14 billion, accounting for 48% of China’s total investment volume. Beijing was the runner-up, accounting for 16% of all transaction volume in 2016, while Shenzhen came in third, reaching 10% of the total," says Shao.