Chinese flee stocks to buy foreign real estate
Chinese buyers have already spent billions in the U.S., UK and Australia, causing property prices to rise -- and experts say much more cash is on its way.
The latest triggers: Chinese stocks have crashed 40% since June, wiping away trillions of dollars in market value; and Beijing surprised investors by allowing the yuan -- or renminbi -- to fall sharply last month.
Chinese are starting to "think money in the bank is not safe -- it won't gain any value botanique at bartley review if the renminbi is still devaluing," said David Ji of Knight Frank, an international real estate agency. "So people will look to real estate as a more solid investment channel."
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Chinese investors are already very active in residential property markets in major cities such as New York, London and Sydney.
They're the leading foreign buyers of U.S. homes. Sales reached a record $29 billion in the 12 months to March 30 -- that's more than a quarter of all foreign purchases by value, according to the National Association of Realtors.
In Australia, sales of homes to Chinese are expected to total $60 billion between now and 2020, double the amount spent in the previous six years, according to Credit Suisse.
And Chinese buyers already account for over a quarter of all London home purchases, says Savills.
With prices rising fast in major world cities, some Chinese buyers are getting more creative. They're teaming up with local partners or looking to newer markets such as Poland. In the UK, they're branching out beyond London and pouring money into surrounding areas, such as the county of Surrey.
Commercial real estate deals are also on the rise.
Knight Frank expects Chinese investors to spend $20 billion on major deals this year, compared with $5.5 billion in 2012.
Chinese are "getting more active right now -- we haven't seen any slowdown," said Simon Lo of Colliers International, a property agency.
Related: China and Qatar buying London properties
China offers limited options for local investors. Many sank money into stocks after domestic property prices began falling around four years ago, or in riskier investments that have proliferated in the shadow banking sector.
But those seeking more stable returns have increasingly turned to overseas real estate.
The rush into world markets has taken place despite an annual limit http://realestate.findlaw.com/ of $50,000 on the amount of money an individual can move out of China.
Those restrictions mean that investing abroad takes more planning -- for example, moving money out over a long period of time, or securing approvals to send large sums abroad -- but it's clear that investor interest isn't going away.
"We've seen big transactions in the States -- buying a whole block of hotels for commercial development...a whole block of flats," Lo said. Investors are "looking at things differently -- what is the best way to secure long term investment opportunities?"
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CNNMoney (Hong Kong) September 2, 2015: 11:29 AM ET