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For Chinese, Bricks Are Worth Their Weight In Gold


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For those tracking the trends of rich Chinese, few areas are more engrossing than overseas investments.

Particularly, observers have been following the flight of yuan into homes in some of the world’s leading cities. A new report by British property agency Knight Frank indicates that this is accelerating: The Chinese are now the world’s biggest buyers of expensive new properties.

In November 2011 a joint report by Bank of China and Hurun, a research and publishing house, claimed that up to half of China’s mega rich, those with at least US$16 million in the bank, were considering emigrating. Cue much speculation that the elites were lining up to flee.

While that may hold some truth, it shouldn’t mask the underlying motivation of Chinese investors: A desire to seek greater returns on their hard-earned, and sometimes ill-gotten, capital.

“Chinese buyers’ global presence is fueled in part by a strong yuan and slowing domestic economy, both of which are encouraging Chinese investors to look further afield in an attempt to diversify their investments,” Knight Frank said in the report released on Tuesday.

The conditions triggering this wave of overseas property investment look like they are strengthening. Expect ever greater swathes of big cities to become Chinese enclaves.

This year will be the third consecutive year of sub-10% annual GDP growth in China and macy be the joint weakest since 1990. There are mounting expectations that annual government growth targets will be lowered to 7% from 2014 as the new political leadership appears prepared to accept weaker expansion as it reconfigures how the economy works.

The performance of the yuan has also encouraged greater overseas activity. According to one property agent in London, a falling pound and rising circuit board renminbi make the UK a smart investment destination. The pace of the yuan’s strengthening against the pound since 2008 has outstripped the increase in prime property prices in the British capital, meaning it is cheaper for Chinese to buy top properties in the city now than it was five years ago.

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