Nery Alaev writes about Chinese investment in European real estate.
I wrote last month about the increasing number of Chinese organisations taking over the reins of German companies – this month an article about increased levels of ‘Greater’ Chinese investment in not just Germany but Europe as a whole has appeared.
I’ve decided to look further into the news and draw a conclusion.
Weak at home, strong abroad
Shanghai, China
The article, published in Property Magazine International, indicates that despite weak growth and unstable environs at home, investment from China in European commercial real estate increased 22% in 2015 when compared to the previous year. The increase was found by Cushman & Wakefield.
Given that China’s economic woes began to materialise halfway through the year, it’s clear that there has been little effect on investment overall.
Interestingly, 2015 saw domination from private organisations as opposed to 2014, which saw ‘sovereign’ funds lead the way. Is this a sign that private companies in China are investing in ‘safer’ European assets? I asked this question in my last article and it still stands, given the nature of investments made.
For example, investment in office property dominated implying business is of interest to investors, as opposed to entertainment or retail.
Branching out
Commenting on the news, Ted Li of Cushman & Wakefield said:
“In line with trends last year, we see a continued focus on the continent with more investment flowing into Germany in particular. Equally we see a continued shift away from offices with investment in retail growing and a focus too towards industrial and logistics assets.
Whilst some institutional money will continue to seek long income assets, those with an existing footprint will consider value-added opportunities as they seek to enhance returns.”
Mr Li’s comment shows that retail investment is growing but offices are still dominant. Interest in industrial assets is reminiscent of my previous article, which focused on takeovers of mostly industrial German companies.
In conclusion, it’s clear that despite troubles at home, Chinese interest in Europe is strong. Will this continue, however?
Nery Alaev
Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.