The hotel and industrial sectors witnessed the most investment growth.
According to the latest JLL Global Capital Flows data, China invested a record $33 billion in international commercial and residential property in 2016, up over 53% from the previous year.
While land, offices, and hotels accounted for 90% of all Chinese outbound capital in the last three years, the hotel and industrial sectors saw the most growth in 2016, thanks to big portfolio sales in the United States and Chinese interest in industrial parks. commercial real estate
"The purchase of Strategic Hotels and Resorts by Anbang Insurance for almost $6 billion spurred hotel activity last year," says David Green-Morgan, JLL's Global Capital Markets Research Director. "With portfolio purchases from Starwood Capital Group and an office tower in Manhattan, China Life Insurance has secured assets across the hotel and office sectors; sovereign wealth fund Chinese Investment Corporation has also been active in the office sector in New York."
Land purchases by Chinese investors resurfaced last year, with a 44 percent increase following major transactions in Hong Kong, Australia, and Malaysia.
"We expect that Chinese investors will continue to be important capital movers in global real estate for many years," Green-Morgan said. "However, considering the recent talk over China's capital outflows, a similar gain in 2017 may be difficult."
Aside from overseas investments, Chinese investors have increased their home investments. In 2016, they accounted for over 86 percent of all transactions in China, up from roughly 75 percent in recent years.
According to Johnny Shao, JLL's Head of Capital Markets for Shanghai and East China, tier 1 cities were the most appealing to these investors.
"Overall transaction volumes in Shanghai reached $14 billion, accounting for 48 percent of China's total investment volume in 2016," Mr Shao writes. "Beijing came in second, accounting for 16 percent of all transaction volume in 2016, and Shenzhen came in third, accounting for 10% of the total."
Hong Kong's high stamp duty tax has failed to keep property prices from rising.
JLL's mass residential capital value index increased 0.5 percent over the last two months, according to the Hong Kong Residential Sales Report released this week. The increase in stamp duty to 15% on all residential transactions failed to halt the upward trend in Hong Kong's residential property prices.
The increase in stamp duty to 15% on all residential transactions is intended to discourage foreign and domestic investors from investing in the city. These obstacles to admission are higher than those in London, Paris, New York, Sydney, Singapore, Berlin, and Vancouver, among other major cities. According to the Land Registry's December numbers, home sales fell 47.3 percent to 3,550 in November from October levels following the hot measure announcement.
In terms of house prices, however, the Hong Kong government's attempt to temper an overheated market can be deemed a failure. According to JLL's Mass Residential Capital Value Index, which is already up 120 percent since the Global Financial Crisis in 2008, mass residential prices haven't slowed down, rising 0.5 percent in the last two months. This raises the question of whether such demand-suppression policies have had much of an impact on assisting more people in achieving home ownership, which is a central topic in the government's long-term housing plan.
In his most recent policy presentation, the Chief Executive also highlighted that one of the main causes of high house prices is high land premiums, and proposed that boosting land supply could help address this problem. With that said, PRC contenders have recently shown growing interest in the public land sales market, with participation in residential land sale tenders increasing from 26% in 2013 to 65% in 2016. With the majority of new market entrants still willing to pay top dollar to plant a flag in the city, the expanded supply of land sites for sale may not be able to bring quick respite to land prices.
"We expect at least five new projects providing 3,900 flats to be released for sale after the Chinese New Year holidays," said Henry Mok, Regional Director of Capital Markets at JLL. "Some developers may adopt more restrained and competitive pricing strategies when the launches flood the market. With the focus largely remaining in the primary market, property sales in the secondary market may suffer."