Outbound property spending hits $16.5b in 2014

Exceeds domestic investment as commercial developers shift focus overseas

Chinese outbound spending on commercial real estate surpassed domestic spending in 2014, according to a research report released by real estate adviser Jones Lang LaSalle (JLL) on Monday.

Chinese investment in overseas commercial real estate, such as offices and hotel assets, increased by nearly 50 percent year-on-year to over $11.2 billion in 2014, showed the JLL report, which is based on statistics obtained by the company.

Meanwhile, investment in domestic commercial properties was $10.15 billion in 2014.

Together with another $5.3 billion poured into overseas residential properties, Chinese real estate outbound investment totaled $16.5 billion in 2014, up 46 percent from 2013, according to the JLL report.

"Transaction activity began to pick up in the global commercial property market since 2009, partly fueled by the emergence of capital from China," David Green-Morgan, head of global research for international capital group at JLL, said in the report.

Last year saw Chinese firms make several major overseas purchases.

In June 2014, commercial property developer Dalian Wanda Group purchased Edificio Espana, a prominent building in the Spanish capital Madrid, for 265 million euros ($334 million).

This was followed by Wanda Group's purchase of Gold Fields House, an office building in Sydney's CBD overlooking the Sydney Harbour from US private equity firm Blackstone Group for $327 million, Reuters reported on Sunday (US time).

Shenzhen-based Gemdale Corp also made its first foray into the US market by partnering with a local company to develop two office buildings in the financial district of San Francisco in April 2014.

"A decade of prosperity in the domestic market has propelled domestic property prices, and this has made prime properties in the world's top cities relatively cheap. The potential depreciation of the yuan has also sped up companies' pace of going abroad to maintain the value of its assets," Zhang Ning, a research fellow with the National Academy of Economic Strategy at the Chinese Academy of Social Sciences, told the Global Times Monday.

Property values in these cities will grow with time, Zhang said.

"In the overseas market, Chinese developers enjoy a unique advantage of being psychologically close to Chinese customers, a consumer group that is growing both in size and appetite," Darren Xia Yangyang, head of international capital group at JLL, told the Global Times on Monday.

However, Zhang said Chinese companies should focus on how to improve operations, innovate their profitability model, and manage local employees according to local laws.

London topped the list of the most attractive cities for Chinese property investors, with the other cities being Sydney, New York, San Francisco, Los Angeles, Chicago, Melbourne, Tokyo and Singapore, according to the JLL report.