08 July 2014

Jones Lang LaSalle: Chinese property ‘invasion’ will ease

  08 July 2014

KUALA LUMPUR: The interest and intensity of Chinese developers diversifying and flooding into cities around the world is temporary and will ease off over the longer term, according to Christopher Fossick, Jones Lang LaSalle (JLL) managing director for Singapore and South-East Asia.

“We will see the Chinese as global investors but not with the intensity of the past 12 to 24 months,” said Fossick, referring to the entry of mainland Chinese developers into Johor.

“The Chinese developers have amassed huge amounts of capital and are looking for opportunities, and as they look to diversify in most cities, they buy at top prices.

“We will see local investors struggling to compete. Japan was doing that in the 1980s when they bought into London and Australia. It is a moment of rush because suddenly, there is this big store of wealth out there and and they have the capability and ability to diversify.

“They are not going to go on at this pace (over the longer term). It will ease off, but the world must adjust to the presence of Chinese buyers and investors.”

Chinese developers like Guangzhou R&F Properties Co Ltd, Agile Property Holdings Ltd and Country Garden Holdings Co Ltd have invested billions in Johor’s Iskandar Malaysia, with plans for land purchases in Kuala Lumpur.

According to real estate consultancy Savills, Greenland Group had announced a US$3.3bil (RM10.47bil) deal in two residential and hotel projects in the country in March.

Reuters reported that Chinese institutional and retail investors had invested a total of US$1.9bil in Malaysian real estate last year, exceeding the US$867mil figure in Hong Kong and US$1.8bil in Singapore.

Fossick said Chinese developers were venturing overseas as a result of various restrictions at home, which forced them abroad. They believe they would be able to “grow faster if they leave their home country”, he said.

At the same time, the low interest rate environment in most parts of the world and improving economies in the United States and parts of Europe have attracted them to fan out.

Fossick said as the US and European economies continue to improve, the investment opportunities will change. This will again affect these Chinese and the global property sector.

“These are opportunistic investments created as a result of qualitative easing. The world is changing and will change.”

Fossick said the interest in the property sector was not limited to one destination or nationality.



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