Beijing's capital controls are weighing on Chinese investors looking to buy property abroad


The report mentioned restrictions placed on foreign real estate investment in 2017 and a significant tightening of lending in the sector last year. That loan environment was the main reason more than $12 billion in Chinese-owned overseas assets were put up for sale in 2018.

“We expect that Chinese banks’ real estate lending may remain tight for much of the year ahead, creating an environment that will clearly continue to restrict deployment of mainland Chinese capital in general, irrespective of geographic location,” James Shepherd, Cushman & Wakefield’s managing director for Greater China Research, said in a press release on the report.

The firm said in the report that despite some recent loosening of policy in China, such as authorities encouraging banks to lend more by cutting the amount of funds they must keep on hand, “the tightened lending environment appears to remain status quo for the real estate sector.”

Larry Hu, head of China economics at Macquarie Commodities and Global Markets, said that controlling capital outflows is the “key concern” of the Chinese government given the waning of its current account surplus and that it doesn’t want foreign exchange reserves to fall too fast.

“So in such a situation they definitely want lower, reduced capital outflows,” Hu told CNBC on Tuesday. “So they put (on) tighter capital controls.”

The domestic property market, meanwhile, is offering little in the way of opportunities.

Peter Churchouse, founder of Hong Kong-based real estate investment firm Portwood Capital, said that tight supply is supporting prices somewhat, but residential transactions by floor area showed limited growth of about 2 percent last year and have fallen as much as 20 to 25 percent in a number of cities so far in 2019.

“That is a signal that we’re going to see a bit of a slowdown in the first half of this year in terms of volumes of transactions,” Churchouse said on CNBC’s “Capital Connection” on Friday.

“I would expect to see that reflected in pricing as well,” Churchouse said. “Not to see a decline in pricing, but to see the pace of growth slowing down,” he said.


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