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Chinese outbound investment into residential development grows rapidly in 2014, up 80% on 1Q13

SHANGHAI, 6 May 2014 – Chinese outbound investment increased by 25% to USD 2.1 billion, compared with the same period in 2013, according to the latest figures from JLL. While Chinese institutional investors are still major buyers of commercial property, the real growth has been in the purchase of residential land for development.

Although commercial investment was flat over the first quarter of the year, Chinese investors still spent over USD 1 billion outside of the country. The US and Australian real estate markets attracted most of this capital from China in 1Q14—the United States with USD 732 million (up from USD 51 million in 1Q13) and Australia with USD 400 million (up from USD 100 million in 1Q13).

While the office sector continues to dominate as the preferred asset class among Chinese commercial real estate investors that are active overseas, there is an increasing interest in residential development, as demonstrated by Greenland’s recent purchases in London, Los Angeles and Sydney, as well as Country Garden’s first foray into the Australian market earlier in the year.

David Green-Morgan, Global Capital Markets Research Director at JLL, said: “As major Chinese residential developers look for opportunities overseas to counteract slower economic and price growth at home, the residential development investment is up 80% (from USD 600 million to USD 1.1 billion), with the United Kingdom, Australia and the United States seeing most of the investment.”

Greenland has been the most active of all Chinese residential developers with purchases of the Ram Brewery and Hertsmere House sites in London, together with a site in Los Angeles and Sydney. While Greenland pursued this strategy alone, a key component of Chinese investment in the first quarter of this year has been the use of partnerships and joint ventures (JVs). This was exemplified by a recent deal in Chicago, where China Cinda joined with the US group Zeller to buy an office building for USD 302 million.

The Chinese property developer, Country Garden Australia Pty Ltd, provided a further example of the trend with its first major investment in the Australian residential property market, purchasing a development site in Sydney’s north-west for AUD 73 million.

While Chinese investment in overseas real estate continues to be spread across the globe, most of the deals in 1Q14 take place in larger, gateway cities such as London, Sydney, Los Angeles and Chicago.

Darren Xia, Director of International Capital Group (ICG) at JLL China, noted: “We expect interest and activity from equity-rich Chinese investors in overseas real estate markets to continue to grow throughout the remainder of 2014 and, as a result, it is possible that the total volume of spend by Chinese investors on commercial real estate outside of China could pass the USD 10 billion mark in 2014.” 

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About JLL

JLL (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.0 billion, JLL has over 200 corporate offices and operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 3.0 billion square feet. Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. 

JLL has over 50 years of experience in Asia Pacific, with over 27,500 employees operating in 80 offices in 15 countries across the region. The firm was named ‘Best Property Consultancy’ in three Asia Pacific countries at the International Property Awards Asia Pacific 2013, and won nine Asia Pacific awards in the Euromoney Real Estate Awards 2013. 

In Greater China, the firm has approximately 1,700 professionals and 12,000 on-site staff, providing quality real estate advice and services in the areas of retail, residential, commercial, management services, project and development services and research. The firm has been serving key clients including various government agencies and developers, as well as owners of high-end residential and commercial buildings in over 80 cities across China. 

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