Chinese’s outbound investment in real estate surge amid local market woe loom large

Admin 10/January/2023 08:11

Key takeaways:
  • thousands of Chinese millionaires seek real estate investment abroad
  • Southeast Asia countries are their desired destination, including Cambodia
  • Cambodia is also likely to benefit from this opportunity due to lots of factors
“We see our clients looking overseas as an alternative because they expect better returns than here in China”

Chinese investors and millionaires seek to invest their money in Southeast Asia’s real estate market, bringing along $48bln worth of real estate investment due to the property market’s situation in China.

New Straits Times cited a survey by real estate firm Juwai IQI claimed that in 2022,  around 10,000 Chinese billionaires to move abroad – bringing approximately $48bl together with them. It noted that countries like Thailand, Vietnam, Singapore, Indonesia, the Philippines, Cambodia, and Laos are their desired destination.

The same source also reported that the decline of China’s property market had urged many Chinese investors to look for investment opportunities abroad.

The number of investors looking to invest abroad increased drastically in 2022, according to the Head of Sales at Juwai IQI Lona Wang

“We see our clients looking overseas as an alternative because they expect better returns than here in China. Prices are falling in many cities across China, especially in second-tier cities, and the new development market looks risky. Investors have decided they prefer to invest overseas,” she was quoted as saying.

Chinese outbound investment has surged drastically during 2017. With an accumulation of over $120bln, most of the investment has poured into residential and commercial real estate. However, Chinese outbound investment tumbled to $50bln in 2018.

How will this benefit Cambodia’s real estate sector?

The strong relationship between Cambodia and China and the new measurement will aid in attracting more Chinese investors to the kingdom. World Bank reported that from  2014 to the first half of 2020, Cambodia received approximately $5bln worth of foreign direct investment. Equivalent one-third went into the real estate and construction sector, and China is the leading country with the most investment in Cambodia’s real estate.

The property market in Cambodia provides an opportunity to generate favorable returns for investors. Besides being listed as one of the fastest economic growth countries in the world,  land and property price in Cambodia remain attractive compared to neighboring countries. On top of that, property prices in Phnom Penh increase by around 15 percent annually. Whereas the gross rental yield stands between 6% to 8% yearly. GlobalPropertyGuid revealed the increase of gross rental yield in other Asia countries like Thailand, Vietnam, the Philippines, Indonesia, Malaysia, and Singapore ranges between 3% to 7%.

Push factors

In 2021, a giant real estate developer, Evergrande, found itself in $300bln of debt , and  buyers stopped paying mortgages  out of fear of unfinished homes. Recently, the government has implemented measures to help developers get out of debt and revitalize the real estate market, including the 16-point measurements– aim to help developers through special loans to ensure all construction is finished and handed successfully to homeowners.

However, it seems Chinese home buyers and investors are having trust issues with the real estate market, making them reluctant to invest after a deep slump. Property sales plunged around 40 percent in 2022.
Ninety percents of Chinese are homeowners, while about 20 percents own more than one home.

Written by: Kem Sreyneth 


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