Chinese real estate developers are following Chinese citizens abroad

 

This is a brand new phenomenon, probably a real mutation with implications for the world economy: Chinese citizens are eager to buy real estate properties abroad, and the trend is increasing, they are actually investing in properties and apartments abroad.

Chinese real estate companes are now moving, following their customer base. The first choice of the Chinese real estate companies are the countries where most Chinese people are moving. There is a couple of countries with a large Chinese presence, such as the US, Australia, Canada, New Zealand and countries close to China such as Singapore, Malaysia.

This trend can be dated back to 2006, when a group of Chinese companies invested more than one billion dollars in Russia, the Baltic Pearl project in St Petersburg. The companies involved in this investment are Shanghai Industrial Group, joined by Ningbo United and Jinjiang, all of those are gigantic Chinese real estate developers.

This was only the beginning with large projects with Chinese financing all over the world, for example in New York in 2012 and 2013, joint ventures between Greenland Group and US Forest City Group to finance the Brooklyn Atlantic Square. This investment is over 5 billion dollars and is the largest real estate project for the last 20 years in New York. It seems that these days Chinese people have decided to make everything big. The same Greenland group has invested in many other countries abroad, such as Australia and South Korea. Another large project involves the Beijing SOHO group in Manhattan. The Chinese investors are really present when it comes to massive investment in real estate developement.

Other groups are involved in developemnts projects in the USA, Vantone, Capital Group, China Railway and SOHO as mentioned above.

This seems to be a new trend and a distinction for these companies in terms of image. The companies that are able to invest abroad are perceived as first class companies with a worldwide focus, compared with smaller companies that are unable to make such investments. This is a sign of success and mutation for these large companies and they built their image towards the Chinese public thanks to these investments.

The projects can be ambitious and done in close coordination with the local actors abroad. The Russian companies and state have coworked in touristic projects in several places in Russia, including Moscow and St Petersburg. The total investment is around 3 billion dollars.

The largest Chinese real estate developer is Vanke, it has set a foot on the US market and is now planning to develop abroad. This company has bought a large real estate project in San Francisco via its US subsidiary Tishman Speyer.

What is noticeable in many of the real estate projects is that the largest part of the buyers are Chinese citizens. There is a will for Chinese people to buy property abroad and they know the Chinese companies, when they are a bit frightened by foreign companies, in ocations that are brand new to them. The Chinese brands such as Vanke have built a strong reputation in China and it’s easy for them to acctract Chinese customer base abroad.

This works both ways, as these companies have chosen to set foot in country with a strong Chinese community, to ensure that the investment could be successful.

This is an unexpected but predictable effect of the Chinese real estate complicated market where it is more and more difficult to buy a home, the authorities have set up strong measures to avoid overheating of the market and the creation of a real estate bubble.

This is now a foreign real esate gold rush for Chinese real estate developers.

 

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