Our partners at Juwai reflected on the financial impact of QDII2 on Global Property Markets. With QDII2, the Chinese government proposes taking a significant step towards removing restrictions on the export of privately held capital. Juwai.com estimates QDII2 –if rolled out nationally– could theoretically deliver as much as US$2.3 trillion to international residential real estate markets alone. Take a look at the table below which reveals the size of likely capital flows to real estate in leading destination countries at allocations of just 5 percent:
International property gives Chinese investors the additional benefits of enabling them to diversify their risks, and is attractive to buyers motivated by investment, education, lifestyle and emigration:
QDII2 will remove a barrier that has limited overseas real estate purchases, and help China get closer to its goal of allowing investors to freely transfer money in and out of the country.
The country started on this path in 2001, when it joined the World Trade Organization.
The abbreviation, “QDII2”, stands for the Qualified Domestic Individual Investor program. The number “2” in the name distinguishes it from an early program with the same initials, the Qualified Domestic Institutional Investor program, or QDII.
Some QDII2 Facts:
First to be rolled out in six cities across China.
Expected to be formally announced in June by China’s State Council, or cabinet.
To enable Chinese individuals to buy overseas real estate, stocks and bonds directly.
Individuals holding assets of at least RMB1m (US$161,000) will be able to participate.
Individuals will be able to invest as much as half of their assets overseas.
Will be limited by an overall quota that places a ceiling on the total amount allowed to be invested via the program. This quota is expected to grow over time.
Corporate investors will be permitted to purchase overseas assets up to $1 billion in value, up from the current limit of $300 million.