China Outbound Real Estate Investment Reaches $10B

Credit: CBRE

Chinese outbound capital flows into global commercial real estate markets have exceeded $10 billion in a year for the first time ever, according to the latest research from CBRE Group, Inc.

Over the past four years annual China-sourced outbound flows to commercial real estate experienced a compound annual growth rate (CAGR) of approximately 72% to reach over $10 billion* for the year 2014. China accounted for over one quarter of total outbound commercial real estate investment from Asia during 2013 and 2014. 

Cities in the U.K., the U.S., and Australia have become the top three markets for mainland Chinese investors in terms of commercial real estate investment. Initial purchase activity has largely focused on residential, premium office and hotel assets in gateway cities.

“The explosive growth in purchases of offshore real estate by Chinese investors has presented a new class of investor to global markets,” said Chris Ludeman, Global President, CBRE Capital Markets. ”Opportunity has drawn these investors to some of the world’s most attractive real estate destinations; as these investors and developers gain experience and become more confident in overseas markets, we expect that an increasing amount will start to look for opportunities across a wider range of geographies and a greater variety of asset types.”

U.S.-bound flows accounted for over one fifth of total outbound investment from China in 2013 and 2014; the majority of which has gone to hotel and office assets, as well as development sites, in gateway cities. Over the two-year period, purchases of hotel and office assets in New York, Los Angeles, Chicago, Houston and San Francisco accounted for over 60% of U.S.-bound capital to commercial real estate, with purchases of premium office and hotel assets in New York and Los Angeles comprising approximately half of the total.

“Chinese investors are only beginning to tap into the vast set of opportunities available to them in the U.S.,” said Brian McAuliffe, Executive Managing Director, Americas, CBRE Capital Markets. “As competition in gateway cities continues to increase, Chinese investors will need to include other large metropolitan areas, such as Atlanta, Boston, Dallas, Denver and Seattle in the hunt for better investment opportunities. Institutional investors are also beginning to take note of the attractive returns offered by industrial and logistics properties. As Chinese investors widen their search to new markets, they will also need to develop a more sophisticated understanding of local dynamics.”


* Figures only account for direct investment into commercial property, and do not include investment into development sites or individual investor purchases of residential property. Source: CBRE, Real Capital Analytics