Chinese Investors Focus on Property Market Investment in Southeast Asia
According to financial analysts, a large number of Chinese investors are now investing in profitable Southeast Asian property markets. The change in investors’ focus has come after the introduction of new measures to cool down property prices in the UK, Canada, Australia, and New Zealand.
While the western markets is the primary focus of Chinese investors, these markets slowed down during the second quarter this year.
Shifting Interest in Property Markets
Home prices in the UK have increased just 2.19 percent this year, as compared to 2.81 percent a year earlier. As compared to the previous decade, home prices have increased by 18.08 percent. To curb the surging property prices, the UK government have decided to stop the influx of foreign capital. Similar has been the case in Australia, New Zealand, and the UK.
Increasing Chinese investment in the Southeast Asian property markets indicates that investors are now exploring new markets. Analysts also say that the shift may be because of diversification of investment portfolio in order to reduce risks.
With the Belt and Road Initiatives of China, the Southeast Asian markets will benefit due to increased infrastructure development. This will lead to an expected increased demand in properties. As a result, Chinese investors are showing increased interest in residential projects in the region.
Statistics show that around a fifth of property sales in Southeast Asia went to Chinese investors. Nearly 45 percent of the owners of new properties in the region were investors from mainland China.
Analysts say that the outlook for the emerging markets have stabilized in the past few months. This has made property an attractive option for foreign investors.
The depreciating currencies of Southeast Asian region as well as the BRI initiative have made the region attractive for investors.
According to analysts, Vietnam will be the main target as its population is increasing. The Vietnamese government also allows lax foreign investors to own around 30 percent of single building apartments.
Also, Thailand has received a lot of enquiries from Chinese real estate investors, according to the website Juwai.com. These online enquiries have increased nearly 215 percent in the past few years.
Doubt Persists about the Southeast Asian Property Value
Despite an uptick in investment in the Southeast Asian properties, some investors doubt whether the trend will continue in the coming years. But they say that due to the end of loose global liquidity, property values in the region might decline.
Investors should be aware of the risks of investing in emerging markets due to tightening of the credit. With an increase in perceived risk, investors will be better off investing in developed nations to preserve their wealth.