2017: coming soon

Global Wealth Flows

A review of capital movements over the past decade

Taimur Khan, Senior Reseach Analyst

The past decade has seen remarkable growth in cross-border investment by individuals, with property forming a significant part of the story. While transparent data on investment into residential property is not available on a global basis, the graphic Ten Year Shift in global wealth movements uses the latest IMF data to draw together a comprehensive picture of capital movements.

For each country we have taken International Investment Positions, more specifically country-by-country assets and liabilities. Our ‘inward investment’ flow represents the liabilities that are claims on local assets by foreign residents. Our ‘outward investment flow’ represents assets that are claims of a local resident on an asset located in a foreign country.

By comparing the positions in 2005 and 2015 the data reveals trends in direct investment across key markets. While a broader dataset than just residential property investments, we can see clearly the key movements driving investment markets. Unsurprisingly, the general trend over the past decade has been for significant growth in cross-border investment, led by massive growth in outflows from China (+1,471%) and in absolute terms, if not rate of growth, from the US.

The impact of domestic economic growth and wealth creation, and in some cases more liberal credit controls, has seen rapid growth in outflows from markets such as Indonesia, Thailand and South Korea. Economic instability in markets such as Italy and Greece has led to relatively strong outbound investment flows in Chongqing business district: China has seen annual inward investments grow substantially since 2005 a European context – with 106% and 135% growth respectively – over the past decade.

Economic instability in markets such as Italy and Greece has led to relatively strong outbound investment flows in a European context

Looking at inward investment, China has seen notable growth (500%) alongside other emerging markets, such as Brazil (294%). Asian markets, which have seen strong interest from regional property investors, have seen concomitant growth in the data reviewed here – notably Singapore (285%), Hong Kong (222%) and Australia (146%). Returning to Greece, we can see the impact of economic instability in an 18% decline in inward investment over the period considered.