KUALA LUMPUR: There is huge scale of growth of Chinese demand for cross-border residential real estate in Asia-Pacific last year.
This dwarfed the modest growth of all the other regions except Africa, according to Juwai IQI.
The centre of gravity for Chinese buyer activity had decisively shifted to Asia Pacific, Juwai IQI executive chairman Georg Chmiel said.
“The (Donald) Trump presidency, Beijing's capital controls and the weaker yuen are the most important factors in shifting Chinese buyer interest.
“Chinese real estate buyers have reacted to uncertainty and risk by choosing markets that are closer, require less capital, and offer better yields. The Asia-Pacific region –and especially Southeast Asia– ticks all three boxes,” Chmiel said in a statement today.
While the Asia Pacific accounted for only about one out of every 10 Chinese global residential real estate buying inquiries made in 2018, it accounted for nearly six out of 10 in 2019.
The Asia-Pacific gained market share at the expense of the rest of the world.
Meanwhile, the other regions all experienced a fall in Chinese market share.
The share of Chinese global real estate buying enquiries going to properties in the Americas fell from 35 per cent in 2018 to 17 per cent last year.
Europe and the Middle East went from receiving 28 per cent of Chinese global buyer enquiries in 2018 to just 13 per cent last year.
The region of Australia, New Zealand, and Oceania lost half its market share and dropped from receiving 25 per cent of Chinese global buyer enquiries in 2018 to only 13 per cent in 2019.
“Given that the year started with a hot-war scare in the Middle East, it’s a safe bet that 2020 will be no less unsettled and contentious than 2019m” Chmiel said.
“We expect Chinese investors to continue to seek to protect their wealth from a potential devaluation by investing overseas. We expect Chinese investors to continue to favour Asia-Pacific markets predominately because of the benefits of proximity, good yields, and low entry prices.”
Chmiel added that during the presidency of Trump, Sino-American relations had become contentious enough to limit demand growth for US property.
The uncertainty caused by the Trump effect and the yuan's weakness against the dollar have caused the US to lose Chinese market share.
“However, Chinese buyer demand, as measured by buyer enquiries made on real estate in the United States, has not fallen. Chinese buyer enquiries in the USA actually increased by 11.2 per cent in 2019. The growth was due to strong second and third quarters, which more than compensated for a negative first quarter and flat fourth quarter.”
For Malaysia, Juwai IQI group executive director Kashif Ansari said despite maintaining an independent stature towards Beijing, the Malaysian government had gone out of its way to woo foreign buyers.
“It seeks to relieve its beleaguered real estate market. Many Malaysian developers already hold an uncomfortable amount of unsold inventory and more new dwellings are being delivered each month.”
Government initiatives included changing the policy to permit offshore buyers to purchase less expensive homes than had been allowed. he added.
“Malaysia had a stellar year when it comes to Chinese demand, with buyers making more than double the number of enquiries in the first quarter than in the same quarter of 2018.
“After nearly bottoming out in the third quarter, growth rebounded strongly in Q4. We think the Q4 jump was due to the government's policy announcement,” he noted.