Foreign climes lure rich Chinese

Buildings Brics:Wealthy investors fear a property crash at home and are keen to buy abroad, either as a hedge for their savings or as a holiday home.

The Chinese are becoming among the most important international property buyers. Above, a potential investor looks at a model of a luxury development in Hawaii. Tom Spender for The National
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The river views are out of this world, the multiple bedrooms are large and equipped with only the finest fittings, and the fashionable outdoor terrace seems perfect for an alfresco breakfast. And the price tag for this luxury apartment in Western Australia? Well, as they say, if you need to ask, you probably cannot afford it.

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Yet what was perhaps most notable about this apartment in Perth's Bayview Terrace, which incidentally was priced at A$6.88 million (Dh26m), is that it did not stand out among the many houses and apartments being marketed at the Luxury Properties Showcase (LPS) held recently at a five-star hotel in Beijing.

There were countless other multimillion-dollar penthouses, villas and even chateaus and islands being promoted to Chinese investors.

The Chinese are becoming among the most important international property buyers, and having accumulated vast fortunes on the back of rapid economic growth, many are looking at the top end of the market.

"The Chinese purchasing power is huge," says Bob Clarke, the managing director of Herald Land, an agency based in Dubai that markets land and property in the UK, and which was present at the LPS event.

In China there is, says Tommy Chia, the president of Istana, a developer based in Singapore, "quite a lot of loose money around" looking for a home.

"A lot of well-heeled Chinese would like to put their money outside [China]," he says. "One to four million dollars is not a lot of money for them. Given the right development, the right location, I think you can extract the right people."

The reasons Chinese investors are looking overseas are various.

There are concerns that the domestic property market is a bubble and could crash, wiping out the value of investments. Also, the authorities have restricted multiple property purchases in China to try to cool the real estate sector, meaning many investors have surplus funds that cannot be invested at home.

There are buyers looking for a place for their children to stay while at university, while other investments will be used as holiday homes. Some purchases are made as part of emigration plans.

"We're starting to see them buying almost anywhere in the world," says Olivier De Treglode, who organised the LPS event. "There is a wide range of profiles of buyers and they have so many different reasons to invest - education for their children, investment, to diversify their lifestyle or for prestige."

There are key markets attracting larger numbers of Chinese buyers.

Agents in London have predicted that soon as many as 10 to 20 per cent of purchases will involve Chinese buyers, while in Manhattan one agency has set up a Chinese-language website. Australia and Canada are also popular, while reports have suggested the number of properties in Singapore being bought by Chinese investors has doubled in three years, leading agencies from the city state to open branches in China.

"It's been fast-growing for the past year," says Michael Wan, the senior associate sales director of CBRE Realty Associates in Singapore.

Another Singapore agent, Jasmine Ye, the general manager of KoP Properties, says Chinese buyers are often looking for properties that are "very high end".

"They want something unique," she says.

Previously, Indonesians and Malaysians made most purchases in Singapore, but now Chinese are, at least, buying just as many properties as any other group, says Mr Wan. Some invest with a view to getting residency, while others are planning to have their children educated in Singapore.

"Some of them, their kids are only four or five years old and they're already buying," he says.

"Singapore is a stable market. It's not a bubble. There is 5 to 20 per cent capital gain annually depending upon the area. In China they have experienced growth of 100 per cent. It's a bubble formation."

Indeed potential Chinese investors such as Dai Guowei, who works in banking, say the risk of a fall in Chinese property prices is a key factor for the growing interest in overseas schemes. Foreign property is regarded as a haven compared with China, where the long-term trajectory for the market, and for political developments that could influence it, is uncertain.

"Chinese property prices have got to such a high level, so they're likely to go down rather than go up," he says. "So many Chinese people like to move their capital overseas to hedge the risk of their investing in China before."

For many Chinese, restrictions on buying foreign currency, with a maximum of US$50,000 (Dh183,655) each year imposed, have limited their ability to buy property overseas. Many have sought ways around the rules by pooling the allowance of friends or joining with other buyers to put together enough for the deposit on a property. Such teams of buyers have been active in the UAE market. Figures for the total amounts invested by Chinese in property overseas do not appear to have been compiled.

Just as Chinese investors have been putting their money into overseas property, so Chinese developers are now starting to become international players.

It was announced only this month that Zhouda Real Estate, based in Hebei province near Beijing, is investing $558m in residential and commercial property projects in Malaysia.

It is really the investors rather than the developers from China who have been blazing a trail overseas, however, and amid talk of double-dip recessions abroad, their presence is particularly significant.

Although in already buoyant markets an influx of Chinese investment risks pushing up prices further, in slower parts of the world, such as sluggish euro-zone countries, their arrival is welcomed.

"In Italy, at this moment it's very quiet because of the crisis," says Luca Maria Crestani from the sales department of Jesolo Lido Village, a beachside project near Venice. A bilingual English-Chinese brochure has been produced by the development to attract the interest of potential buyers from the world's most populous nation.

"There is this opportunity. We try to understand the market here [in China], the situation and to understand if the Chinese people like Italy," he says.

"We are starting now. Some years ago we tried with Russians, now we try with China. We don't know. We hope."

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