Will China’s investment restrictions affect global property markets?

China’s economic growth has gone from strength to strength over the past few decades. And many other countries have benefited or suffered because of this tremendous progress. But as the capital outflow from the Mainland increases so does the Chinese government’s concerns.

They have now clamped down on investment monies coming out of China. How will the rest of the world react to this major shift?

Shanghai

Leadership changes in China may result in policy shifts

As the Communist Party prepares itself for a leadership reshuffle, policy changes seem imminent. The rate of capital outflow has accelerated in recent years. Last year, China’s capital outflow came up to S$1.1 billion. This gives an indication of how much more could be tapped. However, this has also been deemed a threat to China’s economy. It weakens the nation’s currency and dilutes its national growth figures.

Getting around the restrictions

The effect felt closest to home comes from Chinese property developer Country Garden Holdings. Earlier this year, they had closed all its China showrooms for the Forest City development in Johor.  Forest City is a S$142 billion mega-project made up of 4 man-made islands in the Strait of Johor. Chinese nationals have thus far been the target audience of the project. The developers have since turned their attention to Chinese nationals with offshore capital to get around the restrictions. They are also looking at South-east Asian markets to diversify their target audience pool.

Will this change affect the investment monies coming into South-east Asia’s real estate sector?

Or is this largely dependent on the recipient country’s policies?

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