Foreign investors in China have started to move into lower-priced properties. Domestic investors haven't been able to buy these properties because of government policies. About 62 percent of foreign properties are foreign-owned, amounting to 78 billion yuan or USD$9.1 billion.
The Real Deal pointed out that CBRE revealed this fact, which had been the largest amount the investment tracking firm had recorded since 2005 when it first began tabulating such transactions. China had placed these policies for a reason-it was to 'deleverage' and try to turn its economy around. The cost of borrowing, as well as demand for commercial properties, had been boosted by the deal, as analyzed by Sam Xie, head of research in China for CBRE.
These policies have had an unexpected side effect; made for domestic investors, they are now fueling foreign investments as much as they are supposed to make things easier for domestic investors. Deleveraging had done one thing out of many that are, domestic companies and investment firms have shifted from buying to selling, which is more profitable at the moment.
Despite the circumstances, this could be a good thing, as it is analyzed to be a big help for the Chinese yuan. The currency is growing in importance slowly but surely, according to CNBC, and the openness China is continuously showing toward foreign investors and players is going to work great for the country. This will affect the economy more than the ongoing trade dispute the US government is maintaining.
Despite that, though, the Chinese government should be prepared for rough times ahead. Chi Lo, Greater China senior economist at BNP Paribas Asset Management in Hong Kong, said that as the yuan becomes more important, the government will continue to maintain its current policy of overseeing the foreign funds coming into the country in the form of investments.
Much of China's foreign investments have been in real property markets in Beijing and Shanghai. Foreign buyers have also been looking into income-producing real properties in surrounding Wuhan, Nanjing, and Hangzhou, with a particular focus on industrial logistics as well as apartments for rent.
Bright times are eventually coming for the country, though, according to analyst Francis Li, head of capital markets in Greater China for Cushman and Wakefield Plc. They see the property-buying trend continuing well into the year, with foreign investors expected to figure prominently in commercial property investments.
