China’s property market in decline as wealthy Chinese look abroad for a solution
Updated
As the Chinese economy slows, wealthy Chinese are looking for investment opportunities outside of China. This is causing a decline in the property market as buyers look to invest elsewhere.
While this may be bad news for China’s property market, it could be good news for foreign countries that are seeing an influx of Chinese investment.
Beijing’s strict real estate policies and deleveraging campaign have had a significant impact on the property sector
New home prices in China are falling at a slower pace as the authorities ease restrictions. However, the sector is not out of the woods yet, analysts say.
In March, new home prices in major cities fell by 0.07%, slightly less than the 0.13% decline in February.
Director of E-house China Research and Development Institute: “Although the decline was slower, there are still obstacles to a price rebound.”
New home prices in China fell at a slower pace last month as authorities tried to ease restrictions on the property market because slow sales are threatening economic growth.
New home prices in 70 major cities fell 0.07% month-on-month in March. This was slightly lower than the 0.13% decline in February. The data comes from the National Bureau of Statistics.
Chen Xiao, an analyst with Zhuge Zhaofang, said more cities would loosen controls on the property market. She added that the market recovery will continue, although it will be bumpy.
The slowdown in the decline in new home prices in March is a temporary relief for China’s 18.2 trillion yuan ($2.9 trillion) property market. However, the country’s heavily indebted property developers still face cash flow problems and missed payments.
Covid-19 blockades could hamper the recovery of new home prices in China
The debt crises continue to weigh on developers, from large companies like China Evergrande Group and Sunac China Holdings to smaller players like Zhenro Properties.
In addition, contracted sales of China’s top 100 developers fell by 47% in the first quarter of 2022, compared to a year earlier.
In the first quarter, more than 60 municipalities began to ease restrictions on property ownership. Local governments have taken steps to lower down payments, subsidise home purchases, reduce mortgage interest rates and provide financial support to developers.
Senior policy makers have also reduced borrowing costs and increased cash flow to the financial system. At the same time, the Ministry of Finance has halted the introduction of a property tax trial in more cities, citing weak market conditions.
Yan Yuejin (director of E-house China Research) said that although the decline has been slower, there are still obstacles to a rebound in housing prices as prices remain slow in third and fourth tier cities. He added that there are still risks that housing prices will continue to decline.
According to data from E-house China Research, the decline in new home prices in third-tier cities was 0.6 per cent in March compared to a year earlier. This compares with a 4.3% jump in tier one cities and a 1.6% increase in tier two cities, respectively.
China Vanke, the third largest real estate company in China, believes that the “golden age” of Chinese real estate is over.
Chairman Yu Liang is encouraging employees to help keep the company afloat in a declining industry facing a cash crunch.
Vanke said property sales were down 50% from January last year to US$5.6 trillion.
China Vanke’s president has issued a clear call to his employees, asking them to prepare for a brutal battle that could make or break the company.
According to an internal document entitled “You can win, if you have the courage to fight”, Yu Liang said: “We are at our wits’ end” at the company’s annual staff meeting. “Many of our employees do not fully understand the current situation”.
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The 2026 market reality: what the data shows
China’s property sector contracted sharply through 2025 and into 2026. According to the National Bureau of Statistics of China, total real estate development investment fell 17.2% year-on-year in 2025 to 8,278.8 billion yuan. New home prices across 70 cities declined for 27 consecutive months through late 2025, with second and third-tier cities posting year-on-year drops of 2.8% and 4.2% respectively, per China’s State Council. The floor space of newly started construction fell 20.4% in 2025, and residential sales dropped 13% by value. Buyer confidence remains low, and inventory piles up in dozens of cities. The result is a structural shift: wealthy Chinese are moving capital abroad, accelerating a trend that started well before the current downturn.
Why the domestic market lost its appeal for Chinese HNWIs
For two decades, Chinese residential property was the default savings vehicle for the middle class and wealthy alike. That logic has broken down. The collapse of major developers, Evergrande being the most visible case, wiped out billions in pre-sold units and shook confidence across the sector. But the structural problem goes deeper than developer debt.
Demographically, China’s population is shrinking. Fewer young buyers enter the market each year. Cities that once saw double-digit price growth now post quarter after quarter of declines. Second-tier cities face sustained price falls with no clear floor in sight.
The regulatory environment added pressure. The “three red lines” policy introduced in 2020 to rein in developer leverage had the unintended effect of freezing large parts of the construction sector. Government rescue packages helped, but have not restored confidence. Meanwhile, the property tax debate, which has been simmering since 2021, still creates uncertainty for investors with multiple units.
High-net-worth individuals (HNWIs) responded rationally. Rather than wait for a domestic recovery of uncertain timing, they looked at currencies, jurisdictions, and markets that offered stability and legal certainty. The Henley Private Wealth Migration Report 2025 recorded a net outflow of 7,800 millionaires from China in 2025. That figure is down from previous years, but it still represents a consistent, sustained drain of capital and talent. Applications for investment migration programs from Chinese nationals rose 64% in Q1 2025 versus Q1 2024, according to the same report. The direction of travel is clear: Chinese wealth is internationalizing, and real estate is one of the main vehicles.
Where Chinese buyers are going and what they are buying
The shift from domestic to overseas property is not random. Chinese HNWIs follow specific patterns: stable rule of law, freehold ownership rights, strong rental yields, and proximity to Chinese diaspora communities. Several markets have benefited directly from this reallocation.
Dubai and the UAE stand out as the fastest-growing destination. Chinese property purchases in the UAE quadrupled over three years, reaching nearly USD 450 million in 2024, according to Yicai Global. In the first half of 2025, Dubai real estate transactions jumped 22% to 98,726 deals, with total value up 40% to AED 326.9 billion. Chinese buyers are drawn by zero capital gains tax, Golden Visa access, and rental yields averaging 5.3%. The UAE also functions as a geopolitically neutral holding ground, away from both US-China tension and domestic regulatory risk.
Thailand has become the number one destination for Chinese property buyers in Southeast Asia. As of 2025, Chinese capital registered in Thai real estate reached 454.55 billion baht, per Juwai IQI. Proximity to China, lower entry prices, and a well-established Chinese community make Thailand accessible for middle-wealthy buyers, not just ultra-HNWIs.
Australia continues to attract Chinese capital at the higher end. Data from the Foreign Investment Review Board, released in February 2026, showed 929 Australian home sales worth a combined AUD 1.2 billion approved to overseas buyers, with Chinese investors dominating. Juwai IQI reported a 40% increase in Chinese inquiries for Australian homes in Q4 2025 versus Q4 2024. A significant share of those inquiries targeted properties in the AUD 3 million to 5 million range.
Japan attracted a different profile of buyer: those chasing currency opportunity and simple ownership rules. The weak yen through 2024 and into 2025 made Tokyo and Osaka properties a compelling value play for Chinese buyers with USD or HKD liquidity. Japan imposes almost no restrictions on foreign property ownership, which removes a key friction point for Chinese investors accustomed to complex regulatory frameworks at home.
The motivation across all destinations is consistent. Chinese HNWIs are not speculating. They are preserving wealth, securing residency options, and building generational assets outside a domestic market they no longer trust as a store of value.
What changed between 2024 and 2026
The period from 2024 to 2026 marks a change in character, not just scale. In 2024, many Chinese investors still held out hope that government stimulus would stabilize domestic prices. By mid-2025, that expectation had shifted. Stimulus packages helped thin tier-one city inventory, and Shanghai posted a 5.9% year-on-year price rise in August 2025. But tier-two and tier-three cities showed no recovery. The divergence made clear that any rebound would be narrow and concentrated.
On the regulatory side, September 2025 brought a significant change: foreign investors gained the ability to purchase property in China immediately using converted currency for down payments, removing a previous friction point. This was designed to attract inbound capital, but it did not reverse the outbound trend for domestic HNWIs.
Capital controls remain a real constraint. Official channels for moving money overseas are limited to USD 50,000 per person per year. But HNWIs have adapted via corporate structures, Hong Kong accounts, and family distribution. The constraint shapes the method; it does not stop the flow.
The millionaire outflow figure from Henley also tells a nuanced story. The 7,800 net departures in 2025 is lower than peak years, partly because tech hubs like Shenzhen and Hangzhou are retaining talent with strong domestic wealth creation. But those who do leave are moving more capital per person, and they are doing so earlier in life, with longer investment horizons.
Frequently asked questions
Why are wealthy Chinese buying property overseas instead of waiting for China’s market to recover?
The domestic recovery, where it exists, is concentrated in tier-one cities like Shanghai. For most of China’s property market, prices have fallen for over two years with no clear floor. Wealthy buyers are not anti-China. They are diversifying the same way any rational investor would after a prolonged downturn. Overseas property offers what domestic property no longer reliably provides: price stability, legal certainty, and liquidity. Some buyers are also motivated by education planning, wanting property in a country where their children will study. Others use overseas purchase as a first step toward residency by investment, with the UAE Golden Visa and various European programs being popular options in 2025 and 2026.
Which countries are most popular for Chinese overseas property investment in 2025-2026?
Thailand tops the list in Southeast Asia, driven by price accessibility and Chinese community presence. The UAE, specifically Dubai and Abu Dhabi, has seen the fastest growth, with Chinese purchases quadrupling over three years to nearly USD 450 million in 2024. Australia remains strong at the premium end, with Chinese buyers dominating Foreign Investment Review Board approvals. Japan has grown significantly, helped by yen weakness and straightforward ownership rules. In Europe, Portugal and Greece continue to attract buyers through residency programs, though rule changes have made those programs more selective. The US remains a destination for ultra-HNWIs despite geopolitical friction. The common thread across all these markets is stable rule of law and clear property rights, two things that feel less certain at home.
How are Chinese buyers moving money overseas given capital controls?
China limits individual foreign currency conversion to USD 50,000 per year through official channels. Buyers work around this in several legal and semi-legal ways. Family members pool annual quotas. Business owners use corporate accounts with broader access. Hong Kong remains the most common intermediate step: a mainland-linked account in HK can facilitate property purchases in third countries more easily than a direct mainland transfer. Some buyers use cryptocurrency as a transfer vehicle, though this sits in a grey zone under Chinese law. Others distribute capital over multiple years before completing a purchase. None of these methods are frictionless, but they are well-established. Overseas agents and lawyers who work with Chinese clients are familiar with structuring deals around these constraints.
Is China’s property market likely to recover, and will that stop the overseas trend?
A full national recovery is unlikely in the short term. The NBS data for 2025 shows investment down 17.2%, new starts down 20.4%, and sales value down 12.6%. Tier-one cities like Shanghai may stabilize or grow modestly, but tier-two and tier-three cities face demographic headwinds that stimulus alone cannot fix. The Chinese government has tools: rate cuts, purchase restrictions lifted, housing subsidies, and urban redevelopment programs. These can slow the decline. They are unlikely to produce the sustained price growth that made domestic property the default wealth store for the past two decades. For overseas buyers who have already made the move, the calculus does not easily reverse. Residency rights, children in foreign schools, and diversified portfolios create sticky conditions. Even if domestic prices recover, most HNWIs who have already committed overseas capital are not likely to fully repatriate.
How to move forward
If your business targets Chinese HNWIs, the opportunity is real but the channel matters. This audience does not respond to generic advertising. They research in Chinese, on Chinese platforms, primarily Baidu, WeChat, and Xiaohongshu. A listing or service page that does not rank on Baidu does not exist for this buyer.
Start with search visibility. Baidu SEO for terms like 海外房产投资 (overseas property investment) or 移民购房 (immigration property purchase) requires a different technical approach than Google. Structured content, Chinese-language pages, and Baidu-indexed hosting matter. An agency with specific Baidu advertising expertise can accelerate visibility while organic rankings build.
Pair that with WeChat and Xiaohongshu. Chinese HNWIs use WeChat for trusted referrals and community groups. They use Xiaohongshu to research lifestyle decisions, including where to buy overseas. Content that shows real properties, real neighborhoods, and honest market context performs far better than promotional copy. A Xiaohongshu strategy built around authentic local content can put your project in front of buyers who are actively looking.
The buyers are there. They are researching right now. The question is whether your project is visible where they search. Contact the team at SEO Agency China to discuss what a China-facing digital strategy looks like for your market.
Marcus Zhan is a China marketing specialist based in Shanghai. He covers digital marketing, consumer trends, and brand strategy for the Chinese market. Connect with him on LinkedIn for discussions on Chinese overseas investment trends.
Sources: National Bureau of Statistics of China, Investment in Real Estate Development for 2025: https://www.stats.gov.cn/english/PressRelease/202601/t20260120_1962353.html | Henley Private Wealth Migration Report 2025: https://www.henleyglobal.com/publications/henley-private-wealth-migration-report-2025 | Yicai Global, Chinese Investors Eye UAE Real Estate: https://www.yicaiglobal.com/news/chinese-investors-eye-uae-middle-east-real-estate-as-home-market-stalls-experts-say | Juwai IQI, Chinese Buyer Market Insights 2025: https://list.juwai.com/zh/news/2025/10/top-countries-pick-by-chinese-buyer | Palace Auctions, China Real Estate Market 2025-2026: https://palaceauctions.com/chinas-real-estate-market-2025-2026/ | China State Council, Home Price Data August 2025: https://english.www.gov.cn/archive/statistics/202508/15/content_WS689e98f5c6d0868f4e8f4d70.html