The Chinese government seems to understand the economy of China very well. They understand that the rapid growth of assets within the country will put pressure on the economy and they also understand that one way to alleviate that pressure is to expand outwards, putting money into investment opportunities abroad.
The Chinese government has therefore always encouraged different industries to look abroad for opportunities, but in the real estate market up to the present day, investment overseas has been scattered and unpredictable. In short, it has been the exception rather than the rule.
However, a convergence of coincidental events might be the trigger that is needed for that to change.
While the property market in China is still hot (a fact that is continually proven by the gains that property companies make in the stock market such as the rally they made to save the stock index yesterday), the Chinese government has introduced dramatic regulation in order to curb the emergence of a property market bubble. This has resulted in fewer opportunities for domestic property development and even fewer opportunities for foreign investment into the Chinese property market.
These regulations combined with the general encouragement of the Chinese government to look overseas for investment opportunities has resulted in many Chinese property developers looking very seriously at investments in nearby Asian economies as well as overseas economies such as the United States and Australia.
While nothing is written in stone at the moment, if multiple Chinese developers start projects abroad in favour of projects at home, the demand in the Chinese real estate market could end up decreasing dramatically in a short stretch of time.
For this reason, current investors and potential investors in the Chinese property markets need to pay close attention to what happens in the next few months regarding Chinese property investment abroad.
