Chinese demand booms in the foreign property market

According to real estate agents and property data from Australia to Singapore, the relaxation of China’s strict COVID-19 border controls is resulting in an influx of cash flowing abroad. Chinese buyers are showing interest in purchasing properties in Singapore, while Chinese students are buying apartments in Sydney and Melbourne. There also appears to be is an increase in Chinese demand for properties in Thailand.

Although there is limited information available about the initial outflows of capital, there are indications that there is a growing desire among investors to move their money out of China. This is because of the vulnerability of the real estate market and the Chinese government’s taxation regulations, as well as its negative attitude towards wealth accumulation. As a result, investing overseas has become more appealing.

Many of the current property buyers are investors who need moving their money overseas. However, while there is interest and a lot of enquiries, the flow of capital is not as significant as in previous instances, such as in 2016, which resulted in tighter regulations on transferring money from China. Nevertheless, there are indications that some wealthy and middle-class Chinese investors have a long-standing desire to move their wealth overseas as a way of diversifying their investments and protecting their assets from government control.

In addition, there has been an increase in interest from Chinese students who are returning to Australia. Although restrictions on transferring money overseas will probably prevent a massive outflow of capital and significant impact on the world’s second-largest economy, the trend of moving money abroad suggests a certain degree of uncertainty and puts pressure on the currency, which has been struggling to gain ground amid China’s easing of COVID rules.

In Australia, property data is not categorised by nationality, but property agents report that recent foreign interest has contributed to stabilising prices and increasing clearance rates in Sydney, reaching a one-year high in February.

Singapore too is experiencing an inflow of money. The Singapore School stated in response to questions from Reuters that there has been a significant level of interest from Chinese families who are seeking to enrol their children in the institution. Canada, which is also a popular real estate market for Chinese investors, has introduced a two-year ban on foreign buyers. Property agents in Thailand have reported an increase in sales inquiries from China.

Foreign-currency deposits in China’s commercial banks have declined by 16.2% over the year ending February, although it is unclear if this indicates an outflow of capital. According to analysts at French bank Natixis, one way to measure covert capital flight is by monitoring persistent net capital outflows through tourism but for other purposes. They refer to larger capital transfers that accompany travel.

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Chinese demand booms in the foreign property market

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