Chinese property investors still see Australia as good value, despite higher stamp duties and other government fees across the country, according to leading online real estate portal Juwai.com.
Juwai’s Chinese Global Property Investment Report showed mainland Chinese residential and commercial international property purchases in 2017 hit an all-time high of $US119.7 billion ($164.7 billion), an 18.1 per cent increase on 2016.
In Australia and New Zealand, however, investment fell by 23.2 per cent in 2017 to $US18.4 billion.
While $US17.4 billion of that investment occurred in Australia, Juwai.com chief executive Carrie Law said the total value fell by 26.8 per cent, on the back of Chinese capital outflow controls, restrictions on bank financing and new foreign buyer taxes and restrictions. (More details on foreign buyer taxes, pX).
Juwai said $US15.1 billion was invested in residential real estate, while $US3.3 billion was funnelled into commercial property assets.
Top destinations for buyers were Melbourne, Sydney, Brisbane, Adelaide, the Gold Coast, Canberra and Perth.
Notwithstanding the fall in spending, Ms Law said Juwai expected moderate growth in Chinese property investment in Australia in 2018.
“Despite the higher stamp duties, Chinese still see Australia as long-term value,” Ms Law said.
“The majority of our residential buyers are purchasing for their own use, because they have children studying or working here, or because they plan to visit regularly or to retire here.
“Australia offers a stable environment, safety, quality educational institutions, and high quality of life.”
But Ms Law said the outlook for Chinese commercial property investment was much less certain than for the residential sector.
“Sources like KPMG suggest that Chinese commercial real estate investment accounts for one-third of all Chinese corporate direct investment in the country,” she said.
“Political tensions between the two countries have a greater impact in creating uncertainty with corporate commercial real estate investors than they do with individual investors buying residential property for their own use.”
Juwai’s estimates of Chinese investment in Australian property differs from that of the Foreign Investment Review Board, which released data for the 2016-17 financial year in May.
The FIRB said Chinese property investment was valued at $15.3 billion in 2016-17, a $16.6 billion fall compared with the previous year.
Ms Law said Juwai’s estimates were based on several series of data from industry sources.
“We used industry data to estimate that there were about $100 billion of new dwelling sales last year, and about one quarter of those went to foreign buyers,” she said,
“Chinese buyers accounted for about three quarters of foreign buyer spending.
“That yields about $17.4 billion in estimated Chinese residential investment.”
Outside of Australia, the United States was the highest value destination for Chinese investment, at $US41.8 billion, however, the rate of investment fell by 31.9 per cent.
Chinese investment surged highest in Asian property, with $US32.9 billion of spending representing a 352.4 per cent increase on the previous year.
Europe also experienced a significant uplift in Chinese property investment, rising 227.9 per cent to $US25.6 billion.
Ms Law said Juwai expected Chinese investment in global property would increase by between 3 per cent and 8 per cent over 2017.
“That would bring 2018 levels up to around $US123.3 billion to $US129.3 billion globally, Ms Law said.
“We believe this growth to be sustainable and rational.”