London tops the list for Chinese investment for residential and commercial property

London has been the most popular destination for Chinese real estate investors in the first half of 2014 with buyers looking for both residential and commercial properties, new research shows.

Efforts to market to Chinese investors is paying off and overall Chinese outbound investment was 17% higher in the six months of the year than over the same period of 2013 at US$5.4 billion.

The analysis report from JLL shows that commercial investment has taken the lion's share at almost US$4 billion, but the growth has predominantly come from residential investment which is 84% higher than last year at US$1.5 billion.

In the second quarter, the stand out purchases by Chinese investors were shared between London and San Francisco with investment of US$2.3 billion and US$548 million respectively.

Institutional investors targeted London with China Construction Bank, China Overseas Holdings and China Life all buying core CBD office assets. In San Francisco it was also CBD office assets that proved to be in vogue but here, it was a private investor who snapped up the 225 Bush Street asset.

After San Francisco, Chicago is the next bit investment location with US$465 million, followed by Sydney with US$390 million, Madrid with US$361 million, Melbourne with US$191 million and Los Angeles with US$169 million.

‘Although the Chinese investors have been very active in the world's major cities in the first half of 2014, they are energetically pursuing opportunities right across the spectrum of geographies and sectors,’ said David Green-Morgan, global capital markets research director at JLL.

‘For first time overseas investors it makes sense to target the most liquid cities, but for the more experienced, looking at smaller less liquid markets like Spain where yields are higher but so are the risks is a natural progression,’ he explained.

Dalian Wanda became one of the first Chinese investors into the Spanish market in the second quarter of 2014 with a purchase of an office asset in Madrid from the Santander Banking Group.