Manila, 13 March 2017 – In a recently released regional report for Asian markets, Colliers noted that Chinese investment in property in recent years has been heavily focused on the US. This push to the US has obscured rising intra-Asian property capital flows. Despite firm near-term US economic prospects, Colliers expects slower renminbi (RMB) depreciation and political pressures to cause Chinese investment to shift towards Asian markets from 2017.
In 2016, aggregate investment by Asian investors in properties outside Asia amounted to USD58.9 billion. Of this total, mainland Chinese investors represented USD25.2 billion, or 43% of the total. However, at USD69.3 billion, aggregate investment by Asian investors in property within Asia was 18% higher than Asia-to-global investment. Of this total, mainland Chinese investors represented USD12.0 billion, or 17%.
This is an indication that the driver of real estate investment in Asia over the past three years has not been the continuing pattern of rising capital outflows to other regions and stagnating inflows, but the strengthening of intra-regional investment in which China plays a noticeable but not yet dominant role. Colliers believes that mainland Chinese investment in foreign property will continue at a high rate, but that it will be increasingly directed towards Asian rather than non-Asian markets. This would be in keeping with the Chinese government's long-term "Belt and Road" strategy.
“Our opinion now is that the continued weight of investment capital will largely offset upward pressure on cost of funds, meaning that Asian property yields on average at least stay flat this year. We remain positive about Asian property, and see particular investment opportunities in China, Hong Kong and Singapore, and India over the medium term,” said Andrew Haskins, Colliers Asia Executive Director for Research.
Meanwhile, Chinese investments in the Philippine property sector have been few and far between. Among the major investments include Hong Kong-based Arch Capital Management’s joint venture with ArthaLand Corporation for the development of the Cebu Exchange office building in Cebu IT Park.
But Colliers International Philippines expects a surge in Chinese investments in the near to medium term given the Philippine government’s improving relations with the Asian economic giant and the Chinese investors’ continued confidence in the Philippines as a major real estate investment hub in the region. The United Nations Conference on Trade and Development (UNCTAD) ranks the Philippines as among the Top 20 investment destinations over the next three years.
“Evidently, the warming relations between China and the Philippines as well as the Philippines’ rising attractiveness as an investment hotspot should result in more Chinese property investments flowing in into the country,” noted Ieyo de Guzman, Colliers Philippines executive director for investment services.
A key property segment that should benefit from increased investment inflows from China is the industrial sector. A number of Chinese firms involved in the manufacture of steel, plastic injection molded parts, and power transformers have pledged to establish facilities in the Cavite-Laguna-Batangas corridor and the planned development of Philippines-China Industrial Park should attract more Chinese investments in the country in the near to medium term.