Chinese high net worth individuals (HNWIs) invest 35 percent of their wealth overseas, the bulk of which is in property.
While this is good news for real estate agents, it also means that onshore as well as offshore investment providers are losing out.
[verdict_chart id=”9658″]According to a recent GlobalData survey 41 percent of Chinese offshore wealth is invested in real estate, more than twice as much as the global trend.
[verdict_chart id=”9659″]Relatively open and hot property markets such as Canada and Australia rank among the top offshore destinations among cash-up Chinese investors, driving demand with attractive returns.
For example, house prices in Australia’s biggest cities rose by an average of 10.9 percent in 2016, with Sydney taking the lead at 16.7 percent
However, the significant amount of Chinese offshore wealth locked up in property is a lost opportunity for investment managers in China, as well as offshore centers such as Australia.
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By GlobalDataThe main reason that Chinese investors channel wealth out of the country is to gain access to a better range of investment options.
Investment managers reaching out to wealthy Chinese investors will need to offer a wide range of products, spanning plain-vanilla equity investments or basic term-deposits as well as more sophisticated investments, such as private equity or hedge funds.
Failure to do so will mean missing out on at least a chunk of the growing amount of offshore wealth locked up in real estate.
Clearly, investment managers have to up their game; the mere provision of basic stock-picking services will not suffice as long as overseas property markets continue to reward investors with sturdy returns.