HONG KONG,CHINA - Media OutReach - 25 February 2019 - Mainland Chinese Real Estate Investment Overseas (MCREIO) hit a four-yearlow of US$15.7 billion in 2018, a marked decline of 63% y-o-y amid weakeningChinese investor sentiment, tightened policy control and growing economicheadwinds, according to Cushman & Wakefield Research's 2019 OutboundInvestor Intention Survey.

• At the same time ofreining in their spending on overseas real estate, data from Real CapitalAnalytics (RCA) show Chinese investors sold off over US$12 billion of overseasassets in 2018, indicating the start of a massive shift in activity nowweighted more heavily towards disposals. The frenzy of disposal activity wasdriven primarily by ongoing stiff policy control back home, led by a clampdownon lending real estate developers and investors (Chart 1).
• Reinforcing thesignificant slowdown in momentum for overseas investment, 84% of investors inChina surveyed by Cushman & Wakefield Research indicated that they hadeither frozen or reduced their overseas real estate allocations over the pastyear in comparison to 2017.
• By destination, theU.S. and UK held on to their top-tiered positions, ranking No. 1 and 3 in termsof sentiment according to the survey results, despite ongoing U.S.-China tradefrictions and Brexit uncertainties (Chart 2).
• According toRCA/Cushman & Wakefield Research data, the U.S. recorded US$2.3 billionworth of acquisitions against US$3.1 billion of disposal volume, suggesting anet outflow of mainland Chinese real estate capital from the U.S.
• Elsewhere, Hong Kongtook first place for the second consecutive year with US$9.5 billion ofinvestment despite a 20% y-o-y decrease in MCREIO volume, according toRCA/Cushman & Wakefield Research data.
• On the acquisitionfront, the top two sectors of interest remained Office and Residential withSenior Care leaping three places to take 3rd place in Cushman & WakefieldResearch's survey. Sectors shifting down a gear in terms of sentiment were ledby the Hotel sector, where interest plunged 50%.
• In 2019, Chineseoutbound investment is forecast to remain flat amid the expectation that a tightreal estate lending environment will remain in place and continue to restrictdeployment of mainland Chinese capital globally.
• A clear trend ofcaution has emerged looking ahead to 2019, reflected in the current increasingdifficulty in deployment of capital. According to the survey results, 65% ofrespondents said that they were significantly or severely impacted by theprevailing outbound policy control, sharply up from 50% in 2017. Moreover, only18% of respondents said they believe the lending environment will improve in2019.

James Shepherd,Managing Director of Greater China Research, Cushman & Wakefield, said: "We expect that Chinese banks' real estate lending mayremain tight for much of the year ahead, creating an environment that willclearly continue to restrict deployment of mainland Chinese capital in generalirrespective of geographic location. In a time of tight liquidity back home inChina, Chinese investors are disposing of assets at a global level includingChina."

Shepherd added: "Contrary to some market commentators who have assumed thatdisposal activity in the U.S. and UK has been a direct result of prevailingpolitical turmoil, the simple fact is that outside China MCREIO's existingportfolios are heavily weighted to the U.S. and UK, and therefore disposalvolumes appear remarkably high in these markets."

Shepherd continued: "Ever popular in the hearts of Chinese investors,Australia had a strong showing, overtaking the UK for third place in terms ofreal estate investment in 2018."

Jason Zhang, Head ofChina Outbound Investment & Advisory Services, Cushman & Wakefield, said: "Survey results, particularly on sentiment by destinations,views on RMB appreciation and global gateway property prices, have shownMCREIOs are becoming more prudent and selective under the guidance of thegovernment investment policies."

Zhang added: "2019 will continue to be a 'quiet' year in terms ofinvestment volumes but expect to see more M&A activities in real estateoperation platforms together with their portfolios."

Chart 1－ MCREIO Annual Acquisition vs Disposal

Source: RCA / Cushman & Wakefield Greater ChinaResearch

Chart 2－ C&W Investor Intention Survey -- 2019 MCREIOSentiment by Destination

Source: Cushman & Wakefield 2019 Investor Intention Survey

Cushman& Wakefield Research's 2019 Outbound Investor Intention Survey collectedresponses from around 150 of the top Mainland Chinese Real Estate InvestorsOverseas. The survey, conducted during the final quarter of 2018, receivedresponses from 51 such investors, representing more than RMB280 billion ofoffshore capital.

Click HEREto view the full report.

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