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Why Chinese Investors Aren’t Conservative When It Comes To Cash

China has been looking for ways to spent its cash. And there seems to be no shortage of options.

By Jeff Vasishta October 7, 2016

When Wang Jianlin, China’s richest man speaks, people listen. That’s what annual revenue of $44 billion does for you. Recently he’s been speaking about Chinese real estate, where he made his fortune, explaining why he’s gradually diversifying out of the market.

“It’s the “biggest bubble in history,” he told CNN Money. Not exactly reassuring. Wang’s fears are based on the fact that major cities like Shanghai continue to rise in value, despite the stock market implosion last year. Especially because smaller cities, which people have left, have seen price drops. Those diverging economies could, Wang feels, spell disaster.

Related: Free Fallin’: London Property Tumble Attracts Chinese Investors

“I don’t see a good solution to this problem,” he said. “The government has come up with all sorts of measures—limiting purchase or credit—but none have worked. The problem is the economy hasn’t bottomed out. If we remove leverage too fast, the economy may suffer further. So we’ll have to wait until the economy is back on the track of rebounding—that’s when we gradually reduce leverage and debts.”

Homeland instability has seen Chinese investors spreading their cash like a tabloid spreads rumors. $16.1 billion in overseas real estate in the first half of 2016, more than double the amount in the same period last year, with hotels and office’s being the preferred commodity, according to real estate consultancy CBRE.

The major investments aren’t coming from mom and dad with savings hidden under their mattress. The big players are Chinese insurance companies, with conglomerates and property developers which, represent23% and 10% respectively, of the total figure. And while some investors may run for the hills in Britain, in light of the Brexit vote and impending divorce from the UE, the Chinese are galloping into town, money bags a-jingling. With relations between the UK and their EU brethren currently colder than Brangelina’s bedside coffee pot, the UK have been eager to encourage Chinese investment and immigration.

Chinese visitor visitor arrivals in the UK grew 26% in January and February 2016. The UK’s Centre for Economics and Business Research forecasts an additional £126 billion (US$191 billion) in investment from China into the UK between 2015 and 2025. When it comes to flashing the cash, the Chinese are as brazen as bikini clad students during Spring Break.

Keen to educate their children overseas, wealthy Chinese families are pouring over prospectus’ to UK and US universities like broke real estate investors are studying Trump’s tax returns.

Cambridge is the fifth most-viewed UK city on juwai.com. Housing prices in Cambridge have risen 50% since 2010, thanks in part to Chinese property investors who purchase with the intent of integrating their children into local schools before aiming for a future at Cambridge. It’s no surprise that Oxford is the fourth most viewed.

Chinese investors are undisputed gold medal winners in the Olympic Games of spending. Chinese purchasers continued to outpace all others, with their dollar volume exceeding the total of the next four ranked countries combined between April of last year and March of this. Their dollar volume of sales, at $27.3 billion, was a slight decrease from last year’s survey but was still three times as much as Canadian buyers, who were ranked second. Chinese buyers also bought the most expensive homes at a median price of $542,084, according to NAR’s annual report on international activity in U.S. real estate.

Bottom line: For Chinese investors, “Show me the money” isn’t merely a catchphrase—it’s just how they roll.

Jeff Vasishta

ABOUT THE AUTHOR Jeff Vasishta

ABOUT THE AUTHOR Jeff Vasishta

Jeff is a writer, husband and father but not necessarily in that order. As a music journalist he counts Prince, Beyonce and Quincy Jones amongst those he’s interviewed. He's also owned and flipped homes in Brooklyn, NJ, CT and PA.

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