China’s Outbound Real Estate Investment Plunged 82% in the First Half of 2017

The latest official data points to a plunge in overseas real estate investment by Chinese investors for the first half of 2017.

Data previously released by the Ministry of Commerce indicates that in the first half of 2017 China’s non-financial outbound direct investment to 145 different countries and regions was USD$48.19 billion, for a year-on-year decline of 45.8%.

The central government stepped up curbs on capital outflows towards the end of last year, due to concerns over the exodus of funds seen in 2015 and 2016 as major Chinese companies embarked upon an overseas acquisitions spree.

In addition to a plunge in total outbound direct investment, the composition of China’s foreign acquisitions shifted considerably during the first half, as regulators sought to curb “irrational investment” in sectors such as real estate, culture personal fitness and entertainment.

According to official data outbound investment by China’s real estate sector fell 82% year-on-year in the first half, to comprise just 2% of all outbound investment for the period.

The other sectors highlighted by the government – culture, personal fitness and entertainment, saw an even greater decline during the same period, with a year-on-year decline of 82.5%.

Over a month into the second half, data from Wind Information indicates that curbs on capital outflows are continuing to diminish outbound foreign investment.

As of 9 August a total of 210 cross-border acquisitions have taken place involving a total sum of 251.5 billion yuan, for a year-on-year decline of 73.2%.

Only four overseas acquisitions involving Chinese A-share companies have taken place since the start of the year, the largest of which was the $12 billion acquisition of Singapore’s Global Logistic Properties by a consortium comprised of China’s Hopu Investment management, Hillhouse Capital Group, Vanke Group and Bank of China Group Investment.

Ministry of Commerce spokesperson Gao Feng previously said that foreign investment is primarily flowing to the leasing and commercial services sectors; the manufacturing sector, the wholesale and retail sector, as well as the telecommunications, software and IT sectors.

According to MOFCOM the strengthening of inspections of the veracity and compliance of outbound investments has effectively curbed “irrational investment,” helping to further optimise the investment structure, while also leading to a sharp decline in real estate, hotel, theme park and entertainment sector acquisitions.

15 thoughts on “China’s Outbound Real Estate Investment Plunged 82% in the First Half of 2017

  1. […] While recent studies confirm that domestic residents continue to make up the lion share of buyers, an estimated 10-20% (depending on the area) have been non-nationals. And for that portion, the latest Chinese government curbs on capital leaving the country also seem to be taking a bite out of demand.  See: China’s outbound real estate investment plunged 82% in the first half of 2017. […]

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