Investors based in mainland China are looking for markets perceived to be "safe havens," according to results of the 2016 Chinese Outbound Investor Intentions Survey released by DTZ/Cushman & Wakefield. “The markets that feature a wide selection of available assets, high liquidity and relative ease of financing appear to be winning the attention of Chinese investors in search of capital appreciation or wealth preservation,” James Shepherd, DTZ/Cushman & Wakefield's Managing Director, Research, Greater China said.
“Hotels are an increasingly attractive target for institutional Chinese investors, thanks to growing demand for Chinese tourists and relaxed U.S. visa policies that encourage visits,” Justina Fan, DTZ/Cushman & Wakefield's MD for Asia Pacific & head of outbound investment for Greater China, said.
Respondents to the survey largely fell in the institutional investor and real estate developer categories, weighted relatively evenly between them. More than three quarters (76.5 percent) of survey participants are headquartered in mainland China. Roughly half of respondents had oversea investment totaling between RMB 1 billion to 10 billion, while the range of investment varied greatly from less than RMB 100 million to over RMB 10 billion.
Here are five takeaways from the survey:
1. Investors want established markets. The U.S. and Australia saw an increase of 6 percent and 2 percent, respectively, in sentiment over the first 8 months of 2016, as respondents said they increasingly favor tried-and-true destinations in established markets.
2. The UK is still hot. Nearly three-quarters of Chinese investors surveyed felt the investment environment post-Brexit is a good opportunity to invest in UK real estate over the next five years.
3. Offices are tops, but hotels are still big. Commercial property grabbed the most attention in the survey, with almost 80 percent of Chinese investors who responded indicating interest in UK office assets. Hotel investments are gaining favor at the same time, capturing one-third of Chinese outbound capital over the first eight months of 2016 at $7.7 billion, according to data from Real Capital Analytics.
4. Keep an eye on the West Coast. America's western cities are emerging destinations for outbound Chinese investment. While New York City commanded the most investor interest at 96 percent, Chinese investors who responded identified Los Angeles, San Francisco and Seattle as top-5 U.S. cities and are widening their choice of asset classes.
5. U.S. assets are still the prime targets. The U.S. held the top slot for overseas capital allocation by Chinese investors at 44 percent, followed by second-place Australia at a 22 percent share. Rounding out the top five investment destinations by share of interest were the UK (10 percent), Hong Kong (6 percent) and Canada (3 percent).