Homebuying Limits Send China Money Overseas
The restrictions that China began putting on the purchase of residential units since the start of the year are producing an outflow of private investment money to housing markets overseas, according to Wantchina.com.
The government measures are estimated to have diverted about 400 billion yuan ($62.7 billion) from speculative domestic residential real estate investments. Much of that appears to be going to housing markets in the US, Canada, Australia, Europe and Southeast Asia.
During the 12 months beginning March 2010 overseas buyers invested about $41 billion in the US housing market, according to recent data from a US realty firm. Canada accounted for about 23% of those investments, with many of the Canadians likely being Chinese Canadians. China accounted for the second biggest investing segment at 9%, followed by investors from Britain, Mexico and India with 7% each.
The China branch of Colliers International, a Taiwan-based company offering property services, invested over 130 million yuan ($20.37 million) in overseas property during the past six months. Vancouver was one of its key destinations, with Britain, Australia, US, Germany and Singapore also receiving substantial investments.
The Vancouver housing market has seen increasing investments by Chinese. Through the first quarter of this year their proportion had grown to 29% from 25% in 2010. This growing influx has caused home prices there to rise 12% during that period.
During the last two months China investors have spent 120 million pounds (about $180 million) in London’s housing market. In the Canary Wharf international business district one-third of all newly purchased housing units were bought by investors from China and Hong Kong. In 2010 Chinese had bought 10% of newly completed residential properties in the district.
Chinese investment in Asia has also also seen rapid growth. Between January and March Chinese investments in South Korea’s housing market quadrupled over the same period of 2010. In Singapore Chinese real estate investors exceeded those coming from Indonesia and Malaysia for the first time.