Menu

According to JLL, the weakening of the Chinese currency benefits global property markets.

It's been a year since China stunned the world by allowing greater stability in the renminbi exchange rate, which resulted in a historic 1.9 percent decrease in value against the US dollar. اخبار

 

Despite widespread concerns about China's economy, JLL claims that the move has benefited the global real estate industry by increasing mainland Chinese investors' appetite for overseas properties and stoking interest among Chinese insurance and other financial companies in keeping real estate assets rather than cash.

 

After the renminbi depreciation last year, mainland investors have increased their purchases of property assets in Hong Kong and further afield in the United States, where real estate values are linked to the value of the dollar. Wheelock and Co sold both towers of its One Harbourgate complex in Kowloon to mainland investors over the past nine months, with insurance giant China Life purchasing the west tower for HK$5.86 billion in November and Shenzhen billionaire Chen Hongtian's Cheung Kei Holdings acquiring the eastern tower for HK$4.5 billion.

 

"Chinese companies have invested over RMB 28 billion in Hong Kong assets in the last year," said Oscar Chan of JLL's China Capital Markets team. "This appetite for Hong Kong real estate reflects not only the expanding foreign footprint of many mainland firms, but also the growing appreciation of the importance of owning properties denominated in multiple currencies."

 

China's sovereign wealth fund CIC invested $700 million in Manhattan's New York Plaza in May, and China Life partnered with US developer RXR to purchase a New York office tower for $1.65 billion the same month.

 

"As Chinese investors gain more cross-border experience, Chinese institutions have played a role in some of this year's largest transactions in the world's largest real estate market," said Darren Xia, Head of JLL's International Capital Group for China. "Buying assets denominated in foreign currencies allows China's largest investors to diversify their portfolios," he said.

 

"In addition to acquiring overseas properties, China's institutional investors have been looking for more real estate domestically, as property prices in the mainland's key commercial hubs continue to rise," said Johnny Shao, JLL's Head of Capital Markets in East China.

 

SOHO China sold SOHO Century Plaza in Shanghai's Pudong district to Guohua Life Insurance for RMB 3.2 billion earlier this month, just five years after purchasing the project in the Zhuyuan region for RMB 1.89 billion.

 

According to JLL data, premium revenue in China's insurance industry nearly doubled in the last five years, increasing to RMB 2.4 trillion in 2015 from RMB 1.3 trillion in 2010.

 

With some analysts predicting that the People's Bank of China will cause the renminbi to depreciate by up to 3% this year, insurers and other institutional investors have turned to real estate as a reliable source of investment return for their growing portfolios.

 

This increasing pool of funds looking for a return on investment is encouraging for developers like SOHO, which reported this week that it plans to sell three more of its Shanghai assets as the city's rising leasing rates and the service sector continue to attract investors.

Go Back

Comment

Blog Search

Comments

There are currently no blog comments.