Why China is investing in the west, and where the money is going


Chinese real estate transaction volume in western markets reached $30 billion in 2015—double the amount seen in 2014, according to property consultancy firm Knight Frank’s latest research. Notably, as Paul Hart, executive director of Greater China at Knight Frank, told Forbes, gateway cities like Manhattan, London, Sydney and Melbourne account for more than 40 percent of last year’s China-based transactions.

While major developers, insurers and sovereign wealth funds have traditionally been the major players in large-scale international real estate deals, China is now seeing an increase of developers and insurance companies looking to buy. A full 14 out of the top 20 offshore investors last year were developers, up from ten in the previous year, and six were insurance companies, up from four in 2015.

“Now insurers dominate purchasing in the six of the top ten deals [done around the world],” Hart told Forbes, citing high-profile purchases by Anbang Insurance, including New York City's Waldorf Astoria Hotel for $1.95 billion; Heron Tower in London for $1.172 billion plus its $414 million purchase of Merrily Lynch Financial Center in Manhattan. In the same year, Taiping Life Insurance bought luxury apartments on 111 Murray Street for $820 million. 

And with China's domestic economy experiencing instability, international markets may be the safest option for large-scale investments. David Ji, director and head of research and consultancy at Knight Frank, told Forbes that Chinese initiatives like the One Belt One Road project, the Asian Infrastructure Investment Bank and others seem likely encourage outbound investment. 

Source: Forbes