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Chinese investment in Real Estate

Chinese outbound global foreign direct investment (FDI) reached record high in 2016, exceeding USD$200 billion, according to MERICS and the Rhodium Group. Of this total, over USD$33 billion has targeted the commercial and residential real estate sectors, representing a 53% increase from 2015. Unlike any other time, the years 2015-2016 saw a significant rise in Chinese investment in real estate, which primarily were in Australia, Canada, the United Arab Emirates, Greece, Malaysia, Spain, Thailand, Turkey, the United Kingdom and the United States, according to a special report published by CNBC.

According to data collected by the China Institute at the University of Alberta, Chinese (CIUA) investment in the commercial real estate sector in Canada expanded from CAD $30.4 and CAD $32.3 in 2012 and 2013 respectively, to CAD$1.3 billion in 2015 and CAD$3.413 billion in 2016 (CIUA does not track residential real estate). The significant rise in capital outflow has prompted officials in Beijing to tighten regulations in hopes of slowing down the pace of FDI flowing outside the country. A 2017 report by Bloomberg estimated that such regulations have resulted in a 55% decline in outward investment so far in 2017. Consistent with this, according to the data collected by CIUA, Chinese investment in the Canadian real estate sector declined by 33.5% in 2017, as compared to the previous year. More specifically, the average monthly Chinese FDI in commercial real estate shrank from CAD$281.4 in 2016 to CAD$187.4 in 2017.

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