Chinese hedgers attracted to Australian property assets

Chinese hedgers attracted to Australian property assets

Fri, 27/07/2018 - 15:53
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Gold Coast

Gold Coast is quickly becoming a favoured destination for Chinese property investors. Photo: Matt Barrett

Depreciation of the Chinese yuan and the Australian dollar against the greenback has delivered an affordability advantage in Australian property, according to a top Chinese international real estate group.

Juwai.com chief executive Carrie Law said the lower value of the yuan in 2018 would likely result in slow but steady growth in Chinese international property investment over the next 12 months.

Ms Law said Chinese investors would likely move to hedge depreciation risk, with many potential buyers expecting the yuan to be lower than it is today against the US dollar by the end of the year.

“Depreciation risk is one driver, but not the only one,” Ms Law said.

“Overall, there remains great pent up Chinese demand for international assets from both large corporates and small, family investors.”

In Australia, the national currency has also been declining in value, down around 7 per cent from its peak against the yuan last year.

Ms Law said the cheaper Aussie dollar was a powerful driver behind Chinese demand for property.

“Our clients say they still see value in the Australian market,” Ms Law said.

Ms Law said Juwai.com data indicated steady growth in Chinese buyer demand for Australian property over the past two quarters, with an increase of 10.1 per cent in the first three months of 2018, and 4.4 per cent in the second quarter of the year.

“This could herald a more sustained recover in demand at more sustainable growth rates than we saw in 2016’s massive run up in Chinese demand.

“But to be clear, Austrlaia is not more popular overall with Chinese investors than the USA.

“The top Australian destinations for Chinese buyers are Melbourne, Sydney, Brisbane, Adelaide and the Gold Coast, followed by Canberra and Perth.”

Juwai.com’s top destinations for Chinese buying in 2018, ranked by the number of buyer inquiries, are Thailand, the US, Australia, Canada and New Zealand.

Ms Law said Chinese demand for international property had begun to grow despite Beijing’s capital controls, which the Chinese government is showing indications it is willing to relax.

“Capital controls are still a major restriction, and the steps Beijing has taken to loosen capital controls have not been directly relevant to international property investors yet,” she said.

“Chinese demand is for international property is growing again, however.

“They must be finding a way to pay for it – whether through China-based lenders, via overseas lenders or simply from existing assets.”