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Monday, October 13th, 2014

Spain becomes focus for Chinese investors

España Building– MadridA recently published article in the New York Times, written by Spanish correspondent Raphael Minder, has shed light on the prosperous position Spain currently finds itself in with foreign investment, particularly from China, pouring into the country´s property market. The article comes in response to the sale of the historical Spain building in Madrid to Chinese conglomerate Dalian Wanda Group, owned by the millionaire Wang Jianlin, in July (an acquisition valued at more than 265 million Euro) which reflects the very real interest from Chinese investors in the Spanish property market. The article, published by the New York Times, referred to statements made in July by Jaime García-Legaz, State Secretary for the Economy, which support the current trend; ´China has turned its attention to Spain´ he claimed and added that ´letting opportunities for investment in our country pass us by is something that an investor with international interests cannot allow´. Investments like that of Jianlin have been extremely important for Spain in creating a positive image of the Spanish market amongst Chinese investors; investors who usually fix their gazes on other European countries such as France or the UK.

Invest in luxury properties in the Costa BlancaIt is important to note that from the beginning Chinese investors encounter inherent difficulties when it comes to investing outside of their borders. Not to mention the language barrier, even with English, but also the completely foreign mentality and laws regarding the use of private property, thus the process of moving out of China is extremely complex.

Therefore, what attracts these Chinese investors? Last year the number of new millionaires in China grew by 40,000, adding to the rapidly growing upper echelons of the Chinese society. For many of these small investors, often accruing their wealth from family businesses, investments in commercial assets or residential properties in Spain (made possible by the success of the Juwai portal, specialised in marketing real estate in over 58 counties to potential Chinese buyers) are seen as safe and practical methods in securing financial resources.

Furthermore, the introduction of the Support Law for Entrepreneurs and their internationalization in Spain last year has allowed foreign investors, particularly those originating from China, easier access to visas and subsequently residence permits (extendible to spouses and children under the age of 18) with all the advantages that they entail: free travel between participating countries in the Schengen Treaty, the possibility of rejoining family members in Spain, access to the highest quality international education, etc.

Invest in luxury properties in ValenciaThe facts from July show that the benefits of this law were the trigger for the sharp increase in interest from Chinese investors: 282 of the 1880 visas granted in that month were awarded to people of Chinese origin. Although the reason for these visas was not solely due to investments in the real estate sector as the figures are also affiliated with investments related to the Support Law for Entrepreneurs (where there is a minimum threshold of an investment of 500,000 Euro), there is indeed evidence recently published by the National Council of Notaries Public, that link the increase in visas with real estate transactions carried out in the Spanish market in the second trimester of this year. According to the statistics, non-residents continue to make up the large part of foreign sales and currently make up 50% of the total, with a rate increasing at 11% each year. The Valencian Community, with growth of 5%, continues to shine as one of the preferred Spanish regions for foreign buyers. Purchases made by Chinese citizens saw an increase of 45%, making it the most active nationality in the Spanish market amongst non-residents.

Invest in business projectsBesides the acquisition of luxury real estate, Chinese investment has begun to arrive in Spain in other forms sanctioned by the Support Law for Entrepreneurs, for example investments in business projects of general interest. In these cases, Rimontgó has had a key role in the granting of two of the first visas of this type in our country, issued by the Spanish Consulate in Beijing. The recipients of the visas are two Chinese investors and the business project, taking shape in Castile and León, is related to the winemaking industry. Other investments are expected in the near future, after successful visits from several Chinese investors interested in the proposals presented by Rimontgó relating to the real estate, business and industrial sectors. These investments and visits are a clear indication, as mentioned at the beginning, of the increase in Chinese interest in the Spanish market.

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