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“One belt, one path” and one region: how to earn real estate investors on the New Silk Road route in Europe

“One Belt, One Way” is Xi Jinping’s ambitious project, which was announced by the PRC Chairman in September 2013. For four years, from 2014 to 2017, according to the American Enterprise Institute, $ 340 billion was invested in the large-scale idea of ​​restoring the Silk Road. So far, mainly from the national currency reserve, but China hopes to attract more private local and foreign investors in perspective.

The main task of the project is to establish economic ties between the countries of Eurasia. It consists of two parts: the “belt” – the land road from China to Europe, the “path” – the water route through the Indian Ocean. The initiative builds and reconstructs infrastructure, energy and mining industries: railways, pipelines, warehouses and ports. In fact, everything that China implements in these areas today is automatically referred to as “One Belt, One Way” – the initiative has no official list of projects.

Chinese initiative One belt, one way
Illustration: Alexandra Savina / Tranio
In addition to the obvious bonuses associated with an increase in commodity turnover and the creation of new jobs, “One Belt, One Way” can be interesting for real estate investors. According to the estimates of the specialists of the international real estate agency Knight Frank, the project in the participating countries from September 2013 to October 2017 spent more than $ 10 billion on real estate: for construction projects, offices, retail, apartments, logistics facilities and hotels .

According to various estimates, about 80 countries have joined the initiative of China. About a third of partners are concentrated in Eastern Europe — more than in each of the five regions of Asia, the Middle East, Africa, or Oceania. As part of the “One Belt, One Road”, China acquired controlling stakes in the Greek port of Piraeus and the Spanish port of Noatum. The Power of Siberia gas pipeline, which will deliver gas from Russia to China, will be put into operation soon. The Trans-Asian Railway is under construction. from China to the UK.

According to Knight Frank, the Chinese project will ensure the flow of investments specifically in European real estate markets: developing Asian countries cannot offer investors transparency in regulating transactions, high-quality assets, liquidity and stability. According to Juwai.com, the largest portal on the sale of overseas property in China, the Chinese spent $ 25.6 billion on European residential and commercial property in 2017, which is 228% more than in 2016.

Which countries are of particular interest to China, and on which real estate investors can earn there?

Czech
The Chinese entered the top five largest foreign investors in the Czech Republic in 2016 Anthony DELANOIX / Unsplash
China is the fourth largest trading partner of the Czech Republic and the second largest importer: if the value of Czech goods sent to China in 2016 was $ 1.5 billion, then imported goods from China – $ 13 billion, according to a Knight Frank report. About 30 trade agreements have been concluded between the countries. China Eastern Airlines has launched a direct flight from Shanghai to Prague. The Chinese energy company CEFC took advantage of the rapid growth in the number of Chinese tourists in the Czech Republic and bought out several large hotels in Prague: The Mandarin Oriental, Le Palais Art Hotel and Motel One. The company also became the owner of a large office building Florentinum, several shops and restaurants in the center of the capital.

According to Anna Kuryanovich, a senior investment consultant for Tranio, buyers of profitable real estate in the Czech Republic, in addition to traditionally popular hotels, should pay attention to office centers. “Many international companies seek to locate their offices in Prague. The reasons are economic growth, low unemployment (the lowest in the EU as of September 2018) and cheap labor – explains Anna Kuryanovich. “However, while in Prague there is not enough supply of high-quality office space, therefore rental rates are rising.”

Poland
The volume of direct investments from China to Poland in 2016 exceeded their amount in the previous 16 years.
The volume of direct investments from China to Poland in 2016 exceeded their sum over the previous 16 years. Jacek Dylag / Unsplash
Anchor project of China and Poland was the launch of the railway for the delivery of goods from Chengdu to Lodz and back in 2013. In 2015, the railway was extended to Xiamen, a port city located on the southeast coast of China. Its construction led to a 30% increase in trade between the two countries. As for the Polish real estate market, a few years ago, the Bank of China participated in refinancing office buildings in Poland. At the end of 2017, one of the largest logistics platforms, Logicor, sold to the China Investment Corporation the entire portfolio of logistics assets in the amount of $ 14.4 billion, of which 28 facilities worth $ 640 million are located in Poland.

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