Anyone that is in the property investment game right now is keeping a close eye on events unfolding in Beijing, as people try and gauge what the repercussions will be on the global property market as Chinese authorities continue to tighten restrictions on foreign investment.
As far as the UK property market is concerned it has been a good H1 when it comes to Chinese investment, with many high profile UK property purchases including the Iconic “Cheesegrater” building, but they will surely be some ripples felt with the increased restriction in the second half of the year.
The South China Morning Post (SCMP), says China is ramping up its crackdown on capital leaving the country.
Chinese investors kept most of their attention on Hong Kong, Australia, and the US last year, changing course in 2017 as we saw the UK and US their key focus in the last six months.
China is still the number 1 foreign investor into the UK property markets.
“Transaction volumes will definitely go down in the hot destinations, and property prices could also be affected,” Hans Kang, chief investment officer of InfraRed NF Investment Advisers, told the SCMP.
SCMP said on the crackdown:
“On Friday, the State Council said it would restrict overseas investment in a number of areas including property, hotels, the film industry and other forms of entertainment, and sports clubs. Investors would have to seek special approval from the regulators for such ventures.”
Overseas property investment by Chinese firms is down 82 % from the same period last year, with analysts expecting it to drop overall to 84 % for 2017 or US$1.7 billion, according to Morgan Stanley.
The total investment in 2016 was US$10.6 billion.
The UK property markets have seen some of the slack taken up by investors from India, who are now the second largest prime London property investors, this will be much more of a problem for the Australian property markets.
The reduction of Chinese investment is already taking its toll on the Australian construction and property industries with one insolvency analyst saying that more than 2000 local construction companies are at “high to severe risk” of failing in the next 12 months.
Time to hold on to your hats as things could get a little choppy in the short term.
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