China's rich seek shelter from stock market storm in foreign property
15 Jul 2015
As China's equity markets face another roller-coaster week realtors in Australia, Britain and Canada are bracing for a surge of new interest in their already hot property markets, with early signs that wealthy Chinese investors are seeking a safe haven from the turmoil in Shanghai's equity markets.
At its low point last week the Shanghai composite index had lost 32 per cent from its high point in mid-June. The market clawed some ground back late in the week but investors remain nervous and government attempts to slow the slide have largely failed.
Many wealthy Chinese investors had already cashed out. Major shareholders sold 360 billion yuan ($58 billion) in the first five months of 2015 alone, compared to 190 billion yuan in all of 2014 and an average of 100 billion yuan in prior years, according to Bank of America Merrill Lynch.
While much of that money may initially be parked in more liquid assets like U.S. Treasury bonds and safe-haven currencies such as the Swiss franc, there is growing evidence that foreign property sales may receive a boost.
Since 2000, China has had the world's largest outflow of high net worth individuals. Around 91,000 wealthy Chinese sought second citizenship between 2000 and 2014, according to a report by residence investment broker Lio Global, a factor that is fuelling demand to buy foreign property.
Most of these individuals, defined as those with net assets of $1 million or more excluding their primary residences, are moving to the U.S., Hong Kong, Singapore and Britain.
In London, Alex Newall, managing director of super prime residential realtor Hanover Private Office estate agents said he had seen an increase in interest from Chinese investors at the top of the market, although no transactions yet.
"They're wanting to try and park large sums of money - I'm talking from 25 million pounds ($38.5 million) to 150 million pounds," Newell said.
"They're looking to park that capital into London homes."
Australia and Canada are also increasing in popularity, gaining an edge from their weakening currencies.