As at end 2017, China has a population of close to 1.4 billion. Mc Kinsey’s research showed that the Chinese middle class is now over 500 million and the range it uses to define this middle class would be US$11,500 (RM47,000) to US$43,000 (RM175,000) per year. Full article on study by Mc Kinsey here. Assuming their T20 household size is also just 20 percent of the total population, that’s 280 million people. Many have bought properties overseas and latest news is that they are shifting their focus to Asia-Pacific instead of their usual destinations like America, Australia, New Zealand and Oceania. Please read the press release by Juwai IQI below.
Press Release by Juwai IQI
Here are some quick highlights:
– The centre of gravity for Chinese buyer activity has decisively shifted to the Asia-Pacific.
– The share of Chinese global real estate buying enquiries going to properties in the Americas fell from 35% in 2018 to 17% in 2019.
– Europe and the Middle East went from receiving 28% of Chinese global buyer enquiries in 2018 to just 13% in 2019.
– The region of Australia, New Zealand, and Oceania lost half its market share and dropped from receiving 25% of Chinese global buyer enquiries in 2018 to only 13% in 2019.
That Giant Sucking Sound? It’s Chinese Real Estate Demand Moving from the West to Asia
While Chinese demand for cross-border residential real estate grew modestly in 2019 in all global regions except Africa, the huge scale of growth in the Asia-Pacific dwarfed that of the other regions. The centre of gravity for Chinese buyer activity has decisively shifted to the Asia-Pacific.
While the Asia Pacific accounted for only about one out of every 10 Chinese global residential real estate buying inquiries made in 2018, it accounted for nearly 6 out of 10 in 2019. The Asia-Pacific gained market share at the expense of the rest of the world.
Meanwhile, the other regions all experienced a fall in Chinese market share. The share of Chinese global real estate buying enquiries going to properties in the Americas fell from 35% in 2018 to 17% in 2019.
Europe and the Middle East went from receiving 28% of Chinese global buyer enquiries in 2018 to just 13% in 2019. The region of Australia, New Zealand, and Oceania lost half its market share and dropped from receiving 25% of Chinese global buyer enquiries in 2018 to only 13% in 2019.
Key Factors
Juwai IQI Executive Chairman Georg Chmiel said:
“The Trump Presidency, Beijing’s capital controls, and the weaker yuen are the most important factors in shifting Chinese buyer interest.
“Chinese real estate buyers have reacted to uncertainty and risk by choosing markets that are closer, require less capital, and offer better yields. The Asia-Pacific region –and especially Southeast Asia– ticks all three boxes.”
2020 Forecast
“Given that the year started with a hot-war scare in the Middle East,” said Chmiel, “it’s a safe bet that 2020 will be no less unsettled and contentious than 2019. We expect Chinese investors to continue to seek to protect their wealth from a potential devaluation by investing overseas. We expect Chinese investors to continue to favour Asia-Pacific markets predominately because of the benefits of proximity, good yields, and low entry prices.”
Focus: The United States
Chmiel added that, “During the presidency of Donald Trump, Sino-American relations have become contentious enough to limit demand growth for US property. The uncertainty caused by the Trump effect and the Yuen’s weakness against the dollar have caused the US to lose Chinese market share.
“However, Chinese buyer demand, as measured by buyer enquiries made on real estate in the United States, has not fallen. Chinese buyer enquiries in the USA actually increased by 11.2% in 2019. The growth was due to strong second and third quarters, which more than compensated for a negative first quarter and flat fourth quarter.”
Focus: Malaysia
Kashif Ansari, Juwai IQI Group Executive Director, said: “During 2019, despite maintaining an independent stature towards Beijing, the Malaysian government has gone out of its way to woo foreign buyers. It seeks to relieve its beleaguered real estate market. Many Malaysian developers already hold an uncomfortable amount of unsold inventory and more new dwellings are being delivered each month.
“Government initiatives include changing the policy to permit offshore buyers to purchase less expensive homes than had been allowed. “Malaysia had a stellar year when it comes to Chinese demand, with buyers making more than double the number of enquiries in the first quarter than in the same quarter of 2018. After nearly bottoming out in the third quarter, growth rebounded strongly in Q4. We think the Q4 jump was due to the government’s policy announcement.”
— end of press release —
Actually, it does not need any statistician to confirm the effects of Chinese buyers into property markets here in Asia Pacific. Even if just 1 million out of the assumed 280 million people actually have funds ready to buy property and out of these, 2% chose Malaysia, it will already be a potential of 20,000 buyers. This is why many developers are now enticing these potential buyers and I think many more may think of Malaysia since the threshold is now lowered to RM600,000 for Kuala Lumpur for 2020. Happy following.
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Next suggested article: China and India? More will visit Malaysia. They will need accommodations yeah.
