Chinese investments in Australian real estate projected to reach $100 billion

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Chinese tourists in Australia
Chinese tourists take pictures of themselves standing in front of the Sydney Opera House in Sydney, Australia, September 28, 2015. Reuters/David Gray

Chinese buyers have spent a record $133.7 billion in foreign real estate last year. Investments have slowed since the start of 2017, but Chinese property listing website Juwai.com said it was projected to reach $100 billion by the end of the year.

Demand in foreign real estate is still strong. However, Australian property investments by Chinese buyers are not expected to stay at last year’s levels.

Chief of Operations for Juwai.com Sue Jong witnessed the dropping investment flows while staying strong by historic standards. “Capital controls, bank lending standards and foreign buyer taxes have combined to wind back the clock to 2015,” Business Insider Australia quotes her as saying.

Juwai.com determined the total amount of property investments across Australia by using separate figures from the Foreign Investment Review Board. It found that Chinese investors bought $23.8 billion dollars worth of Australian property last year, a rise from $18.4 billion in 2015.

The impact of tighter capital controls was felt this year. There are reports 80 percent of Chinese investors intended to broaden the terms of settlement on new apartments purchased off the plan.

Credit Suisse has compiled data that showed there were over 1,500 properties purchased by foreign buyers between October 2016 and January 2017. Eighty percent of those buyers were Chinese.

Juwai.com’s report combines international purchases from both retail and corporate investors in China. According to its website, the report is based on Juwai.com’s own data and the information it collected from industry and governments.

Aside from Australia, other top countries for foreign investments last year are the United States, Hong Kong, Canada and the United Kingdom. The US topped the list of Chinese property investment in 2016.

“A Sea of Money” reports on Australia obtaining the second largest share of Chinese investment by dollar value last year. The report notes that Australia appeals to Chinese investors because of its proximity and deep commercial ties to China. Its world-leading 26 years without a recession and investment markets also make Australia appealing not only for Chinese buyers, but also for immigrants and students. Investments from China have been among the most essential enablers of Australia’s residential property boom.

“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,” Jong said. She added they anticipate half of new investments could go to property.

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