Chinese in love with Australian property

Chinese in love with Australian property

14 July 2017

A new wave of Chinese property investors and developers is set to enter the Australian property market despite recent Chinese restrictions limiting outbound capital to USD $50,000 per year, states a new report released by JLL.

The report called The Future of Chinese Residential Developers in Australia found that the existing pool of Chinese developers in Australia have paved the way for a group of larger, more risk-averse Chinese companies to target premium locations throughout Australia.

“Australia continues to be a major investment destination for Chinese capital and many Chinese real estate companies are serious about having some footprint [here],” Michael Zhang, head of JLL’s China desk, told the Australian Financial Review.

“Australia’s average deal size is smaller than that of the US and the UK, which makes investing here accessible to investors of all sizes,” he said.

Report author and JLL senior analyst Vince De Zoysa added: “Some of the Chinese residential developers [noted in the report] are already showing interest in the Australian market or [have entered] Australia through other industries, in particular infrastructure. This allows them to establish a local presence in Australia in their core industry before moving up the risk and reward curve into residential development.”

A recent report from Chinese property listing website Juwai.com projects that Chinese buyers are expected to splash $104.5 billion on international property in 2017, with about one fifth of that to be sunk into Australia, says Melbourne’s Herald Sun.

The report entitled A Sea of Money reveals that Australia received the second largest share of Chinese investment by dollar value in 2016, behind the USA but ahead of Hong Kong, Canada, and the UK.

Between October 2016 and January 2017, more than 1,500 properties in Australia were purchased by foreign owners, and 80 per cent of those buyers were Chinese.

“We forecast that Chinese investors will acquire more than $2 trillion of overseas assets in coming decade or so as they close the under-investment gap. Up to half this new investment could go to property,” Sue Jong, Chief of Operations for Juwai.com, told Business Insider Australia.