China outbound real estate investments to peak

Spurred by China's dizzying economic growth and runaway real; estate prices at home, cashed-up Chinese are now snapping up investment properties in other parts of the world. The latest forecasts show that China's outbound real estate investments could climb to a new high of five billion US dollars this year.

Brick by brick, Chinese investors are mapping out how to build up their real estate assets…

Not only within China, but also overseas.

Martina Fuchs said, "Chinese real estate investors are increasingly going global. Jones Lang LaSalle projects that Chinese outbound real estate investment could reach up to 5 billion USD in 2013, up 20 percent from last year."

The global property services firm estimates that in 2012, money flowing out of China into real estate investments overseas hit 4 billion US dollars. This was already 33 percent higher than in 2011.

David Green-Morgan, global capital mkts research dir. of Jones Lang Lasalle, "We see much more activity from all sorts of groups in China, developers, institutions, high net worth individuals, as well as the SOEs, they are becoming much more active on the global property market."

So far, Chinese real estate investors are still targeting mega projects in "super cities" such as New York, London, Paris, or Tokyo. And what are the assets that they are snapping up?

David Green-Morgan said, "They love offices and hotels in the biggest cities around the world, flagship buildings, high-end hotels that they invest in, very save investments, but expect that to change as Chinese investors become more sophisticated and understand the market better and become more adventurous in terms of sectors and locations they want to invest in."

These investors have ambitious targets.

Huang Nubo, board chairman of Beijing Zhongkun Investment Group, said, "We will most probably invest in northern Europe, Finland, Norway and Sweden. I want to build holiday resorts in each of these countries. Zhong Kun will build an international holiday zone. As Chinese people move to cultural consumption, I think our next step is to go to northern Europe.

Jones Lang LaSalle estimates that in the first quarter, Chinese investors have already allocated 1 billion US dollars to overseas real estate alone.

The overseas hotel and hospitality sector is expected to get a big slice of the Chinese capital cake.

Arthur De Haast, head int'l capital group of Jones Lang Lasalle, said, "The main driver is the fact that there is an expectation that the number of tourists outbound from China will increase substantially over the coming years, and major investors and some hotel companies here in China are seeking to position themselves in those cities where they expect the Chinese visitors to be of a significant number."

But let's not forget the downside risks. China's economic output unexpectedly stumbled in the first three months of the year, which may slow down the investment frenzy to a certain extent.