Chinese Investors Hedge Lower RMB with Malaysian Property

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Juwai.com released a statement by CEO Carrie Law about the impact of the lower Chinese renminbi (RMB) on Chinese property investment trends in Malaysia

Carrie Law, CEO and Director of Juwai.com, a Chinese international real estate website and the exclusive international real estate partner to Chinese online giant Tencent, said, “The desire to hedge depreciation risk is absolutely a driver of Chinese Malaysian property investment. Most of our buyers believe that the Chinese currency will trend downwards throughout this year, while the Ringgit is expected to be stronger by year-end.

“There are some big differences from 2016, because in 2016, there was an almost hysterical rush to invest overseas amid fears that the Chinese currency was facing rapid and possibly repeated devaluation amid unprecedented capital outflows. There was also serious concern about a possible significant slowdown in GDP growth.

Today, neither factor applies to the psychology of most Chinese international property investors. Instead, there is a general confidence in Beijing’s ability to manage both GDP growth and the currency in a fluid international environment.

“Our outlook is for relatively slow but steady growth in Chinese property investment in the coming 12 months, both in Malaysia and globally. Depreciation risk is one driver, but not the only one. Overall, there remains great pent-up Chinese demand for Malaysian assets from both large corporates and small, family investors”, said Law.

Another factor is that Beijing has been quietly experimenting with loosening capital controls. If this continues, we could see a corresponding increase in international real estate innocent investment. Capital controls are still a major restriction, and the steps Beijing has taken to loosen capital controls have not been directly relevant to international property investors yet. Chinese demand for international property is growing again; however, they must find a way to pay for it — whether through China-based lenders, via overseas lenders, or simply from existing assets.

“Malaysia is ranked eighth in Chinese property investment, by number of enquiries, up from tenth in 2017. The top five countries in 2018, by number of buyer inquiries not total investment, are Thailand, the United States, Australia, Canada, and New Zealand. Malaysia benefits from Chinese investment through the direct investment itself, fees and taxes, job creation, demand for locally produced building materials and supplies, and the commercial links that inevitably develop between two countries linked by investment and population movements,” added Law.