Chinese “capital flight” drives cash towards Vietnamese real estate market
Chinese “capital flight” drives cash towards Vietnamese real estate market
So-called “Chinese capital flight” – that is, Chinese investors fleeing from China– may cause the flow of Chinese capital into Vietnam to soar in the years to come.
Analysts all have noted that Chinese capital has been finding its way to Vietnam through different means, especially through Hong Kong and Singapore.
Dr. Alan Phan commented that in the capital flight movement, Chinese funds have been flowing en masse into Europe, the US, Australia and the two most liberal financial centers, Hong Kong and Singapore. This has led to the deposit surplus in Singapore reaching its highest peak, forcing Singaporean financial institutions to re-invest the money in other places.
The analyst noted that Singapore, which has gained high economic achievements in the last two decades, has become a trustworthy destination for financial investors from the US, Europe, Australia and China.
The strong capital flow to Singapore has created a real estate bubble in the country. Therefore, the Singaporean government has encouraged the country’s financial institutions to make outward investments to ease the domestic pressure.
Four countries in Asia– Vietnam, Thailand, Myanmar and Indonesia – are considered as Singapore’s strategic partners.
In the capital flight movement, Asia’s richest billionaire, Li KaShing, in 2013 sold off a series of projects in China. The move attracted special attention from other investors, because the billionaire reportedly tends to unload his assets 2-3 years before crisis hits.
To date, the Li family has sold Metropolitan Plaza in Guang Zhou, Oriental Financial Center in Shanghai and International Financial Center in Nanjing. The billionaire’s son, Richard Li, also announced the sale of Pacific Century Place in Beijing, worth $900 million.
As such, the Li family has collected $2.9 billion in capital withdrawn from the Chinese real estate market over the last year.
A recent report of Cushman & Wakefield, a real estate service firm, predicts that in the context of the economic downturn, the Chinese real estate market will see the prices falling further this year.
The forecast has led analysts to believe that Chinese investors will seek opportunities in overseas markets.
Greenland Shanghai earlier this year announced its plan to set up a representative office in Hong Kong and plans to enter the US real estate market.
Chinese capital has been available in Vietnam. Analysts note that resort real estate is proving to be very attractive in the eyes of investors.
The Q1 latest report of CBRE, a real estate service firm, showed that Hong Kong and Chinese investors are eyeing projects in resort & entertainment complex development in Da Nang.
Resorts and hotels in the central coastal provinces, including NhaTrang and Da Nang, have been making fat profits thanks to the high number of Chinese travelers. The good business performance of Crowne Plaza Da Nang has prompted the hotel’s managers to consider expanding the project to increase the number of hotel rooms to 1,100.
Commenting about the Chinese capital flow, Dr. Phan said it would be helpful for Vietnam to partially settle its existing problems. However, he warned that the game may take many more years to draw to an end.
vietnamnet
