Legal risks in overseas real estate investments

In recent years, following the influence of real estate control policies in first-tier cities, reduced domestic investment channels, renminbi appreciation and the rebound of real estate markets in Europe and the US, an increasing number of Chinese investors are going abroad for real estate investment. This article is a brief analysis of the potential legal risks such investments may be exposed to.

Features to note

The following features are evident in overseas real estate investments by Chinese investors:

• Gradual increase of institutional investors. Domestic institutional investors have accelerated their overseas real estate investment following the gradual relaxation of relevant policies. For example, several Chinese insurers have carried out overseas acquisitions of landmark commercial properties in response to the China Insurance Regulatory Commission’s (CIRC) relaxation of restrictions on overseas real estate investment with insurance funds in March this year.
• Gradual increase of developers. In recent years an increasing number of domestic real estate developers are going abroad for the development of various types of real estate projects. Generally speaking, these projects target Chinese investors as their main clients in order to maximize brand benefits.
• Expanding investment areas. The areas of overseas real estate investment by Chinese investors are expanding, from the US, UK, Australia and Hong Kong during the early years of investment to less familiar territory in Southeast Asia, Japan, Korea, the Middle East and the Caribbean. These emerging investment destinations are all focusing on attracting investors from foreign countries, including China.

Zhang Jida and Owen Yang are partners in the Beijing office of DaHui Lawyers