Developers still seem keen on outbound investment

Chinese real estate developers' enthusiasm for the domestic market significantly cooled in the first quarter, but their interest in outbound investment especially in the residential sector stayed strong.

Although outbound investment in commercial propery was flat in the first quarter, investment in sites for residential projects surged 80 percent, according to JLL, an international real estate services and investment management firm.

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The surge in land acquisition was the major driver of total outbound investment, which expanded 25 percent to $2.1 billion. About $1 billion went into commercial property, and the other $1.1 billion went to residential.

The United States and Australian real estate markets attracted most of the capital from China in the first quarter. The US drew $732 million (up from $51 million in the first quarter of 2013),and Australia took $400 million (up from $100-million).

While the office sector continues to dominate as the preferred asset class among Chinese commercial real estate investors who are active overseas, there is an increasing appetite for residential development.

According to Wang Ying, general manager of Vantone Holdings Co Ltd's residential project in Taipei, many factors make outbound investment attractive for Chinese residents. These include comparatively low interest rates and down payments, as well as higher rents.

Vantone launched a residential project called Taipei 2011 three years ago. About90 percent has been sold, with 40 percent of the buyers from the Chinese mainland,45 percent local and 15 percent overseas Chinese.

"Joining hands with strong local partners is really important for Chinese property developers' overseas expansion," said Wang.