Skip to main content

China’s Belt and Road property boom cools off

Financial Times

International investment in commercial real estate almost halves from 2016 peak Gwadar Port in Pakistan is seen as an important hub on China's Belt and Road

Don Weinland in Beijing

A global real estate boom fueled by China’s ambitious Belt and Road Initiative has slowed to a crawl, as Beijing seeks to rein in rogue building projects across the developing world. So far this year, less than $1bn has been invested into overseas commercial property projects by Chinese developers in designated BRI countries. That puts this year’s total on track to be far below last year’s figure of about $14bn, and marks another sharp drop from the peak of $23.6bn in 2016, according to data compiled by Washington-based consulting firm RWR Advisory. When China announced its $1tn plan to build bridges, roads and ports in emerging markets starting in 2013, it also unleashed a wave of investments into hotels, office buildings and casinos from Mongolia to Montenegro — an unintended consequence of the plan. For Chinese real estate developers the Belt and Road Initiative looked like an official green light to invest in projects in the roughly 150 participating countries.

But Beijing is hitting the brakes on overseas construction and some companies that invested abroad under the banner of the BRI are now ditching the affiliation. “It does appear, including in commercial real estate development projects in BRI countries, that a noticeable slowdown, or an effort to discipline, occurred,” said Andrew Davenport, RWR’s chief operating officer. “There was a degree of concern about capital flight and, perhaps, in general, a sense that the exuberance and blank-cheque approach to BRI by state-owned enterprises and policy banks was reeling a little bit out of control.”

Capital flight has been a key concern among Chinese policymakers. Overseas investments that require companies to sell renminbi and buy dollars are carefully vetted to make sure the investments are in line with government policy and not just a means of moving money out of the country. China is becoming a lot smarter about this and giving more direction. They need these investments to make sense, especially for banks Christopher Lee, chief corporate ratings officer for greater China at S&P Global Ratings BRI gave a number of smaller companies a new justification for forays overseas. In 2015 and 2016, a flurry of Chinese developers labelled their overseas investments as Belt and Road deals. Some investors even added “Silk Road” to their company names as a means of showing support for the programme. Zhongqi Overseas Group, a government-owned company, said in 2016 that its sprawling casino on the Cambodian coast was part of BRI. It has since removed all references to Belt and Road from its website as government regulation has increased. One Hong Kong-listed Chinese beverage company, originally called JLF Investments, changed its name to New Silkroad Culturaltainment in 2015 before buying a casino in South Korea and pursuing several other overseas property deals. “When they first proposed BRI, the government was very vague on what it included,” said Christopher Lee, chief corporate ratings officer for greater China at S&P Global Ratings. “But China is becoming a lot smarter about this and giving more direction. They need these investments to make sense, especially for banks.” The level of debt developing countries owe to Chinese banks for BRI projects has raised concerns in country’s such as Pakistan, Sri Lanka and the Maldives. Asian Infrastructure Investment Bank president Jin Liqun said last week at a conference in China that Beijing would control the debt risks of these projects. Recommended Belt and Road Initiative Why would Italy endorse China’s Belt and Road Initiative? Some of the biggest private investors in BRI real estate have been forced to begin selling assets. HNA, once one of China’s largest overseas commercial real estate investors, often labelled its buyouts as part of BRI. In 2018, it came under government pressure to sell many of those assets, such as an office tower in Sydney. CEFC, another company that advertised its affiliation with BRI, has also been forced to sell some of its commercial real estate to government groups in BRI countries, such as the Czech Republic. Sam Xie, head of research at CBRE China, a consultancy, said that Chinese real estate investors have become net sellers on the global market, although investments in BRI countries have held up better than in some developed markets. “Chinese outbound investment into global real estate has clearly moderated as regulations have tightened,” he said.


Popular posts from this blog

SSG Commando Muddassir Iqbal of Pakistan Army

“ Commando Muddassir Iqbal was part of the team who conducted Army Public School operation on 16 December 2014. In this video he reveals that he along with other commandos was ordered to kill the innocent children inside school, when asked why should they kill children after killing all the terrorist he was told that it would be a chance to defame Taliban and get nation on the side. He and all other commandos killed children and later Taliban was blamed. Muddassir Iqbal has deserted the military and now he is  with mujahedeen somewhere in AF PAK border area” For authenticity of  this tape journalists can easy reach to his home town to interview his family members or   ISPR as he reveals his army service number” Asalam o Alaikum: My name is Muddassir Iqbal. My father’s name is Naimat Ali. I belong to Sialkot divison (Punjab province), my village is Shamsher Poor and district, tehsil and post office  Narowal. Unfortunately I was working in Pakistan army. I feel embarrassed to tell yo

CPEC Jobs in Pakistan, salary details

JOBS...نوکریاں چائنہ کمپنی میں Please help the deserving persons... Salary: Salary package in China–Pakistan Economic Corridor (CPEC) in these 300,000 jobs shall be on daily wages. The details of the daily wages are as follows; Welder: Rs. 1,700 daily Heavy Duty Driver: Rs. 1,700 daily Mason: Rs. 1,500 daily Helper: Rs. 850 daily Electrician: Rs. 1,700 daily Surveyor: Rs. 2,500 daily Security Guard: Rs. 1,600 daily Bulldozer operator: Rs. 2,200 daily Concrete mixer machine operator: Rs. 2,000 daily Roller operator: Rs. 2,000 daily Steel fixer: Rs. 2,200 daily Iron Shuttering fixer: Rs. 1,800 daily Account clerk: Rs. 2,200 daily Carpenter: Rs. 1,700 daily Light duty driver: Rs. 1,700 daily Labour: Rs. 900 daily Para Engine mechanic: Rs. 1,700 daily Pipe fitter: Rs. 1,700 daily Storekeeper: Rs. 1,700 daily Office boy: Rs. 1,200 daily Excavator operator: Rs. 2,200 daily Shovel operator: Rs. 2,200 daily Computer operator: Rs. 2,200 daily Security Supervisor: Rs.

A ‘European Silk Road’

publication_icon Philipp Heimberger ,  Mario Holzner and Artem Kochnev wiiw Research Report No. 430, August 2018  43 pages including 10 Tables and 17 Figures FREE DOWNLOAD The German version can be found  here . In this study we argue for a ‘Big Push’ in infrastructure investments in greater Europe. We propose the building of a European Silk Road, which connects the industrial centres in the west with the populous, but less developed regions in the east of the continent and thereby is meant to generate more growth and employment in the short term as well as in the medium and long term. After its completion, the European Silk Road would extend overland around 11,000 kilometres on a northern route from Lisbon to Uralsk on the Russian-Kazakh border and on a southern route from Milan to Volgograd and Baku. Central parts are the route from Lyon to Moscow in the north and from Milan to Constanţa in the south. The southern route would link Central Europe with the Black Sea area and