Australia Property

[greengiraffe]

• Oct 20 2015 at 9:30 PM 
  

Chinese investment only just getting started, says JLL

• Share via Email

NaN of
[img=620x0]http://www.afr.com/content/dam/images/1/0/0/f/v/e/image.related.afrArticleLead.620x350.gkddy9.png/1445331462787.jpg[/img]China is transitioning from ‘made in China’ to ‘made for China’. Getty Images
[Image: 1426054187157.png]

• Share on twitter

by Mercedes Ruehl
Sharemarket scares and growth fears about China are overdone, with Chinese outbound capital expected to hit a record $US20 billion ($27.5 billion) by the end of the year according to real estate group JLL. 
"In 2013 we saw the first big wave of Chinese outbound capital, with $US11 billion deployed from China," JLL's International Capital Markets director Darren Xia, based in Beijing, said. 
"That number was $US16.5 billion in 2014, with the second destination for that capital being Sydney. Over the year to date that number is already $US17 billion and we are forecasting it to hit over $US200billion by the end of the year."
In  a presentation entitled Investment Super Power? China's Growing Role in the International Investment Landscape, Mr Xia said China is transitioning from 'made in China' to 'made for China'.

"[China] consumes 54 per cent of global aluminium, 45 per cent of global steel, 30 per cent of rice and 12 per cent of oil. Another factor is growing middle class. There is wealth appreciating in China that is happening in a big way and we just aren't hearing about it."
In the past 6 months, the slowing Chinese economy and volatility in the sharemarket have created a lot of uncertainty. JLL believes the stockmarket is not a true indication of the Chinese economy. "The US population is 61 per cent allocated to financial products. When we come to China that number is 15 per cent," Mr Xia said. 
But when it comes to real estate, the Chinese are 39 per cent allocated to real estate, as compared with the US, which is 23per cent.There are four types of capital coming out of China: insurance groups, sovereign wealth funds, developers and others such as private wealthy individuals and corporates. All want to diversify overseas. 
One example is insurance groups, Mr Xia said. Current legislation in China says 15 per cent of assets under management can be allocated to overseas investment or real estate. Analysis of the top 10 insurance companies in China by JLL using that figure puts the number of investable assets that the Chinese insurance companies can deploy at $US500 billion.


"If we put that number with the fact we are already seeing a lot more developers in the local market, a lot more private investors investing in hotels and offices, then I think we are really only still seeing the tip of the iceberg for Chinese capital."