Stock market trouble could send more Chinese money offshore

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The flow of Chinese money directed at foreign real estate will not be throttled by stock market turmoil in the Asian superpower according to a recent survey by Juwai.

Juwai, an internet portal that markets Australian real estate to Chinese buyers, recently surveyed real estate agents, located within and outside mainland China, who work with Chinese buyers of international real estate what impact the recent rapid drop in Chinese equities values would have on Chinese international property buying.

More than half of all respondents, 55%, believed the share market turmoil will lead to an increase in the amount of international real estate purchased by Chinese buyers, while another 20% predicted it would have no impact on Chinese appetite for international real estate.

Only 10% of all respondents believed demand for foreign real estate would fall, while 15% were unsure.

Of the surveyed real estate agents located within mainland China, 48% believed the stock market upheaval would increase off-shore investments buy Chines buyers, while 40% said there would be no impact.

Only 4% said there would be a decrease in the foreign real estate bought by Chinese as a result of the upheaval, while 8% said they were unsure of what impact there would be.

Simon Henry, co-founder of Juwai, said it appears Chinese investors may be losing confidence in their country’s share market.

“Last year, China’s stock market began to look like a credible alternative to other investment categories, like property. Many investors now believe the stock market has lost its credibility as an alternative to real estate. With the domestic stock market so unpredictable, international real estate looks like a better investment,” Henry said.

“I wouldn’t call it capital flight so much as a search for quality. Many wealthy Chinese are self-made and have most of their assets tied up in their own company. For anyone in that position, it is prudent to diversify both internationally and into other types of assets like property,” he said.

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