In recent years, more and more Chinese investors have chosen to invest overseas real estate for asset allocation. However, due to China’s foreign exchange control policies, Chinese investors have developed various methods to circumvent capital control when investing overseas real estate. These experiences are enlightening for the new western investment real estate agents when serving Chinese investors. This article will analyze the behaviors of Chinese real estate investors under capital control and provide suggestions for western real estate agents.
The continuous demand from Chinese real estate investors under capital control
Although China has capital control policies, it does not affect the demand from high net worth Chinese individual investors. Chinese real estate investors have already accumulated their wealth in offshore accounts in Hong Kong and Singapore. For those middle class investors, they borrow or pool money from their family members already settled abroad when making down payment. Chinese real estate buyers keep finding alternatives to work around capital control policies. Therefore, their demand remains strong in overseas real estate markets like the US, Canada, Australia despite recent policy changes.
How Chinese buyers transfer funds overseas under capital control
Many Chinese buyers resort to mortgages instead of paying in full cash when buying overseas properties under capital control. Some Chinese buyers rent abroad first and then slowly transfer funds out of China into their overseas accounts. It’s also common for Chinese buyers to borrow or pool funds from family members already living abroad. Although the detailed fund flow is opaque to western real estate agents, they need to be aware that Chinese buyers have their ways of moving money overseas.
What to expect for new western real estate agents
For new real estate agents serving Chinese buyers, they need to anticipate a learning curve in understanding Chinese buyers’ behaviors. Instead of turning down deals due to funds transfer difficulty, agents can suggest financing options to help Chinese buyers. Building connections with existing Chinese communities abroad also helps to generate referrals when capital control tightens. Overall demand from Chinese buyers will remain strong in top investment destinations as they find alternatives to participate in those real estate markets.
Under China’s capital control policies, Chinese real estate investors still have strong demand in major overseas markets like US, Canada and Australia. Although recent policy changes have some short-term impact, Chinese buyers are experienced in moving funds out of China to participate in foreign real estate investment. New western real estate agents need to understand Chinese buyers’ funding channels and anticipate their needs.