THE ECONOMIC FALLOUT IN CHINA MAY BENEFIT THE INTERNATIONAL PROPERTY MARKET AS WEALTHY CHINESE BUYERS LOOK FOR SAFER HAVENS

It doesn’t take a crystal ball to see that the domestic real estate market in China is going to take a bit of a hammering this year. Increasing interest rates in the US, coupled with the economic slowdown, doesn’t bode well for the country’s real estate prospects, but according to the latest report from the Knight Frank Prime Cities Forecast, it won’t be only the Chinese market that feels the heat.

The report notes that prices for luxury property in major cities are expected to slow by nearly half this year – from 3% in 2015 to 1.7% in 2016.

“We’re moving into a different environment, where you won’t see the level of wealth creation in China that you’ve seen in recent years,” says Liam Bailey, global head of research at Knight Frank.

The report predicts that price growth in Shanghai is expected to fall by more than half, from 10% in 2015 to 4% in 2016. Hong Kong is expected to take the biggest knock and it is estimated that house prices will drop by 5%. Neighbouring countries favoured by wealthy Chinese investors are also going to bear the brunt of the fallout, and it is expected that property prices in Singapore will drop by 3.3% this year.

However it’s not all doom and gloom. Bailey says as economic uncertainty within China takes hold, the desire to diversify outside the country has increased in both the wealthy and middle-class segments, which could bode well for certain sectors of the international market.

Words: Lea Jacobs