Dec 2018

Where do Chinese Property Investors park their money?

Surprising news?

Mainland Chinese money flows through every corner of the globe.  The economic powerhouse has grown and grown at an amazing pace over the past 30 years.  Personally, I can remember, 22 years ago, visiting a growing city in southern China called Guangzhou.  At that time a small city with not much going on.  I had crossed the border from Hong Kong to visit the Holiday Inn, at that time one of the only foreign hotel chains in China.  The hotel was built on a 3 lane expressway.  The only traffic using the road were bicycles, a few mopeds and the odd bus.  What were the Chinese thinking building such a road?  Fast forward to today, they were planning for the growth and Guangzhou, like so many other Chinese cities is now a massive city, a major part of the huge Chinese economy.

Phenomenal Growth

The growth has been phenomenal bringing the living standards for the majority of Chinese up and creating a new class of communist super rich.  Opulence and the display of wealth are everywhere in new China.  The nouveau riche class know how to spend but also how to invest and grow their fortunes.  Chinese individuals and Chinese companies are buying up businesses, shares and real estate all over the globe and building wealth, they hope for generations to come.

Where are the Chinese investing?

A great article this week on answered that very question and “Here Are The Top 5 Markets Chinese investors are pouring their cash into“, the results by investment volume are;

  1. The United States – US$39.7 billion
  2. Hong Kong – US$23.1 billion
  3. The United Kingdom – US$22 billion
  4. Australia – US$17.4 billion
  5. Japan – US$4.9 billion

The results are not too surprising, but focusing on Japan, as I always do, I was interested to read the reasons for Japan’s allure to Chinese investors.  The Olympics in 2020, the continued urbanisation of the country, and finally high yields.  But I almost fell off my chair when I read high yields of 4-5%.  Where are they investing???  JPI and our customers would not even look at a property with a 5% yield, there is no point.  Instead, we seek out properties with returns of 7, 8 or 9%, find a JV partner, purchase the property, and benefit from a stable respectful tenant that helps JPI and our investors grow.

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