As currency and stock market shares can go up and down like a cycling yo-yo, real estate investment is usually a secure choice. In the past month, the unexpected devaluation of China’s yuan has accelerated an already growing interest in overseas real estate investment. Especially where China’s rich are concerned. 

Popular Destination for Real Estate Investment of the Rich Chinese

This interest in overseas real estate investment is nothing new for the Chinese market even though the headlines about the yuan indicate otherwise. Real estate investment has been the area of interest for rich Chinese clients and has grown steadily over the past few years with particular interest in the U.S., Australia, U.K., and Canada.

Back in 2011, Forbes reported that in just six months China’s super rich real estate investment was 1.3 billion yuan ($200 million) on property in Vancouver, London, and Australia.

“One of the reasons the China real estate investment market is so hot is because wealthy Chinese are buying property to hold onto real assets, rather than put money in low yielding bank bonds and volatile equities. The super rich are doing real estate investment outside of China in an effort to avoid taxes,” reported Forbes (21-06-2011).

Since 2011, it’s not only the super rich that are buying abroad. China has had a steadily growing middle class, some of whom have grown into the “rich” class. The U.S., Australia, Canada and the U.K. have become prime property destinations for Chinese real estate investment. However, with the recent weakening of the yuan increases the likelihood that the Chinese market will look abroad for investment. 

Thomas Lam, the head of valuation and consultancy at Knight Frank believes that the ultra-high-net-worth Chinese investors will choose to invest in overseas properties in global gateway cities. Especially before the value of the yuan weakens further.

“As the yuan will, in any case, have to fall, rich Chinese will likely either shift their savings into other currencies or buy overseas properties in other markets with higher yields as a way to hedge risk,” Lam said.

So where are the rich Chinese choosing for their real estate investment? Australia has been a popular choice for a while for its proximity to China, especially since it’s only a 2-hour time difference. However, the United States and Canada’s west coast have also been popular. While London is on the other side of the globe, the property market is hot there for investment purposes.

However, some investors and businessmen are looking to buy closer to home. Japan’s low priced homes are also attracting Chinese investors, especially those from Hong Kong. Since the yen has also fallen in value recently, there is more risk attached to real estate investment in Japan.

Despite the currency devaluation, Hong Kong businessman Tan Tsz-kin is undaunted by the decreasing yen. “Compared with China, Japanese properties have a greater upside potential,” Tsz-kin said. One of the main factors that drew him to Japan was its low prices and low risk. The yen has dropped in value.Therefore,  the risk of the yen dropping so drastically again is minimal.

Beyond Japan, other popular destinations were Malaysia, Portugal, New Zealand has also been more popular choices.

Another factor to consider is the immigration opportunities owning an overseas property can bring. Certain countries grant permanent residency to Asian property owners if their property exceeds a certain value. In Australia, real estate investment over 5 million AUD can grant Chinese buyers permanent residency. Other countries following suit include Portugal and Malta. Canada once offered this opportunity but retracted its Immigrant Investor Program in 2014. Thus, it formerly allowed residency to wealthy real estate investors from other countries.

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