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06-10-2014, 10:27 PM
More Chinese cash on the way
Nick Lenaghan and Michael Bleby
462 words
7 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
China further eased restrictions of outbound investment this week, with a fresh wave of capital expected to make its way into the Australian property market.
Under the changes, which take effect from October 6, China's commerce ministry will relax the requirements for outbound investments that need its approval.
The latest edict is among a number of reforms since 2012 that China has made in order to reduce the red tape holding back its own investors moving offshore.
"A new raft of easing of policies is going to come in October this year," said Hong Kong-based Simon Smith, Savills research senior director on Monday.
"That might help encourage overseas investment. That's something to watch."
The reforms have accompanied a broader shift in the Chinese economy away from its reliance on foreign investment, toward domestic drivers.Outbound investment rising
At the same time outbound investment from China has been gathering pace in the last five years, in comparison with foreign investment.
The global energy sector has been the main targets for outbound Chinese investment although real estate is proving attractive.
Chinese sovereign wealth funds have joined the charge, led by China Investment Corp and the State Administration of Foreign Exchange, which each control $US550 billion ($633 billion) in funds.
Along with them are the conglomerates, such as Fosun International and Dalian Wanda, which are investing in Australia, and developers including China Vanke, Greenland Group and Guangzhou's R & F Properties.
Owned by the Shanghai municipality, Greenland is planning Sydney's tallest residential tower and a 1500-unit project at Flemington in Melbourne.
The next wave of investment could involve Chinese insurance giants such as China Life Insurance, Ping An Insurance and China Taiping Insurance, says Mr Smith and his Shanghai-based research colleague James McDonald.Insurance company ownership
China Life has an exposure in the Australian residential development market through its investment in Sino-Ocean Land, which is backing the 63-level Eq apartment tower in the Melbourne CBD. Restrictions on the amount of direct property held by China's insurance companies have been eased even further this year.
In June last year, Ping An snapped up the Lloyd's building in London for £260 million ($478 million) following that initial easing of restrictions. As well, Chinese insurers can allocate more of their capital offshore. There are almost 140 Chinese insurers, controlling $US1.4 trillion in assets under management.
"They are getting fairly low returns on investment at home and should be keen to look overseas," Mr Smith said.
A lack of capability and experience offshore could temper some of that expected activity as well as the limited opportunity for the kind of assets insurers need, he said.
Fairfax Media Management Pty Limited
Document AFNR000020141006eaa70004e
Nick Lenaghan and Michael Bleby
462 words
7 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
China further eased restrictions of outbound investment this week, with a fresh wave of capital expected to make its way into the Australian property market.
Under the changes, which take effect from October 6, China's commerce ministry will relax the requirements for outbound investments that need its approval.
The latest edict is among a number of reforms since 2012 that China has made in order to reduce the red tape holding back its own investors moving offshore.
"A new raft of easing of policies is going to come in October this year," said Hong Kong-based Simon Smith, Savills research senior director on Monday.
"That might help encourage overseas investment. That's something to watch."
The reforms have accompanied a broader shift in the Chinese economy away from its reliance on foreign investment, toward domestic drivers.Outbound investment rising
At the same time outbound investment from China has been gathering pace in the last five years, in comparison with foreign investment.
The global energy sector has been the main targets for outbound Chinese investment although real estate is proving attractive.
Chinese sovereign wealth funds have joined the charge, led by China Investment Corp and the State Administration of Foreign Exchange, which each control $US550 billion ($633 billion) in funds.
Along with them are the conglomerates, such as Fosun International and Dalian Wanda, which are investing in Australia, and developers including China Vanke, Greenland Group and Guangzhou's R & F Properties.
Owned by the Shanghai municipality, Greenland is planning Sydney's tallest residential tower and a 1500-unit project at Flemington in Melbourne.
The next wave of investment could involve Chinese insurance giants such as China Life Insurance, Ping An Insurance and China Taiping Insurance, says Mr Smith and his Shanghai-based research colleague James McDonald.Insurance company ownership
China Life has an exposure in the Australian residential development market through its investment in Sino-Ocean Land, which is backing the 63-level Eq apartment tower in the Melbourne CBD. Restrictions on the amount of direct property held by China's insurance companies have been eased even further this year.
In June last year, Ping An snapped up the Lloyd's building in London for £260 million ($478 million) following that initial easing of restrictions. As well, Chinese insurers can allocate more of their capital offshore. There are almost 140 Chinese insurers, controlling $US1.4 trillion in assets under management.
"They are getting fairly low returns on investment at home and should be keen to look overseas," Mr Smith said.
A lack of capability and experience offshore could temper some of that expected activity as well as the limited opportunity for the kind of assets insurers need, he said.
Fairfax Media Management Pty Limited
Document AFNR000020141006eaa70004e