Many Chinese investors are beginning to turn their attention to overseas real estate markets during the domestic real estate investment downturn. Experts warn that buying properties in foreign countries is risky - investors should do careful due diligence and invest prudently.

Overseas real estate transactions hit record high

Statistics from the organizing committee of the Beijing International Property Expo show that projects in locations outside Beijing and in overseas countries played a major role in the four-day spring expo from April 10 to 13, 2014.

"The number of overseas exhibitors increased by 30 percent compared with last autumn's event, a result that exceeded our expectations," said Wei Kefei, director of the expo's international department.

According to analysis conducted by the organizing committee of the Beijing International Property Expo, 15 percent of potential buyers said they would consider buying overseas properties.

Wei Kefei said that traditional emigration areas like the U.S. and Europe were still hot choices at the expo. However, due to the decline of the domestic livable index, island nations including Cyprus, Fiji, Mauritius, Thailand and other emerging market countries were becoming increasingly popular with investors, mainly for their attractive scenery and low living and property costs.

Getting a residency permit through buying property is an attraction

With the improvement of living standards in China, the pursuit of broader investment channels, high-quality education, retirement and leisure opportunities has driven more Chinese investors to buy properties in overseas counties.

According to Zhang Dawei, director of Beijing Zhongyuan Real Estate, there is no scope for investment in any domestic real estate markets that are of interest, due to purchase and credit restrictions, while environmental pollution has caused a decline in quality of life, and the relatively better environment and natural resources available abroad have attracted many Chinese investors.

In addition, more and more Chinese people are opting for overseas properties not as accommodation, but to secure residency permits. To attract more investment, many European countries including Portugal, Spain, Greece, and Cyprus, which are all eager to shake off the impact of the European debt crisis, have launched favorable immigration policies, offering residency permits to buyers of property.

Be prudent and look for properties at the bottom of the market

Zheng Xiangdong, deputy secretary general of the organizing committee of the Beijing International Property Expo, explains that there are many differences between buying property in China and in overseas countries. Firstly, buying property abroad is a very different matter from real estate speculation in China; secondly, investment does not automatically enable immigration; thirdly, all investments carry an element of risk.

Zhang Dawei observes that risks arise from ttwo sources. The first is the high cost of owning a foreign property. Overseas properties may be cheaper to purchase but more expensive when occupied. In addition to a variety of taxes and insurance costs, the actual profit on an investment may be limited. The second is that overseas property buyers often choose to rent to others rather than occupy their property. But in many countries tenants enjoy much greater protection than in China. Most domestic investors know little about this phenomenon, and may experience legal and administrative problems. In addition, compared with the appreciation rate of domestic real estate, property prices abroad may not offer anything like the same level of gains.

The article is edited and translated from《国外楼盘结伴来华抢买家》, source: People's Daily Overseas Edition, author: Zhou Xiaoyuan