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Investors find a home in overseas real estate

By HU YUANYUAN  (China Daily)

08:30, April 25, 2013

China's outbound investment into commercial real estate could reach $5 billion this year, international real estate advisory company Jones Lang LaSalle, or JLL, said in a report on Wednesday.

"Offices in New York, London, Singapore and Sydney are all popular destinations for Chinese investors," said David Green-Morgan, research director of global capital markets at JLL.

Those investors include institutional ones such as sovereign fund China Investment Corp, insurance companies and State-owned enterprises as well as high net worth individuals.

In the first quarter of this year, Chinese investors poured $1 billion into London office stock, according to JLL.

Chinese life insurance company Ping An, for instance, is reportedly set to buy Richard Rogers' Lloyd's building in London for around 260 million pounds ($397 million) from current owner Commerz Real, according to The Times.

China Investment Corp is reported to be among a trio of Asian investors vying to buy Chiswick Park, an 800-million-pounds London office complex.

According to the Financial Times, citing unnamed sources, the deal would be the United Kingdom's biggest property deal since the start of the financial crisis.

Other bidders for the 335,280-square-meter development, which is owned by the United States private equity firm Blackstone, include government-backed funds from South Korea and Malaysia, according to the report.

"Chinese investors now prefer setting up joint ventures or finding a local partner to invest in Europe," said Matthew Richards, regional director of JLL's International Capital Group (Europe).

According to JLL, money flowing out of China into direct real estate investment overseas reached $4 billion in 2012, up 33 percent from 2011.

In the last decade, real estate investment opportunities outside of China increasingly attracted Chinese capital.

In 2003, just 2 percent of all Chinese capital invested in real estate was going overseas; by 2012 this figure had hit 26 percent, according to JLL.

This profound shift in how capital is being invested has resulted in the growth of China as a key player in the global market for direct investment in commercial real estate.

For Arthur de Haast, head of the International Capital Group and chairman of Hotels and Hospitality Group at JLL, China has always had the potential to be a major source of capital for real estate investment globally.

"Our forecast is that China, and the Asia-Pacific region as a whole, will see this trend continue over the next 20 years," said Haast.

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