China Real Estate Industry Investment Promotion Report
The report was jointly published by Deloitte Research team, the Investment Promotion Agency of Ministry of Commerce, P.R. China (CIPA) and Deloitte China Real Estate Industry Group. The report focuses on the development and trends of China residential and commercial properties. Under the new economic normality, the impact of economic slowdown, currency devaluation, consumption and technology upgrades, and capital market fluctuations were analysed; detail examining the scale, investment model, driving forces as well as trends and challenges of China "inbound" and "outbound" property investment.
Viewpoints / key findings
Real estate industry has been a significant pillar of the national economic in China. It maintained a relatively rapid growth rate in the past decade and has become an important sector that attracts foreign investment and promotes Chinese enterprises to go global. Since 2014, the China's economy has entered "new normal", economic slowdown as well as the property prices, oversupply of the property needs to be digested gradually. Therefore, the China's property market is entering a new round of adjustment. The government has introduced various control measures on properties and strengthened supervision of real estate development financing in order to suppress the bubbles and ensure sound development of the industry. The main findings of the report are as follows:
- The relaxation of foreign direct investment was aiming to provide a more relaxed policy environment for the real estate industry, enhance the expectations of buyers, and ease the outflow of foreign capital. This will benefit the high-end property market in the first-and second-tier cities. However, the current development trend and the influence of government regulation tightened the capital outflow of real estate developers, and slowed down the property market.
- The scale of foreign investment continued to increase during the past 10 years. Major investors are from Hong Kong, Singapore and Southeast Asia. Large-scale projects are the mainstay, and the number of projects has been reduced year-by-year. The first and second-tier cities are the main targets for foreign investors, and large-scale commercial complex covering shops, hotels, high-end apartments, and office buildings have gradually become mainstream.
- Real estate investment funds from Europe and America and real estate developers from Singapore, Hong Kong, and Malaysia constituted a series of luxury high-end residential and urban landmarks in China. We anticipated that mature and high-quality property operation concepts will enrich the retail sector and promote market prosperity.
- Chinese real estate developers will be on the lookout for North America, Europe, Australia and Southeast Asia countries. Investors going global through foreign direct investment, overseas mergers and acquisitions, and overseas financing, which represented by direct investment on residential sites and commercial complex in developing countries, as well as the acquisition of high-end properties in developed countries in Europe and America. However, the change in government policy is a fundamental factor affecting future foreign investment. Since 2017, the Chinese government has continuously monitored the outflow of capital, and overseas property investments will continue to be curbed.