Chinese investors in Australian property are being increasingly lured to Melbourne, drawn by the city's multi-cultural offerings and top universities.
Data from China-based international real estate portal Juwai.com showed Melbourne was the most viewed location in Australia by Chinese buyers in 2017, followed by Sydney, Brisbane, Gold Coast and Adelaide.
Forecasts by global financial services company Credit Suisse show Chinese investment is expected to increase in 2018 in Australia, despite tough lending restrictions, limits on how much cash can come out of China to invest in property and a Foreign Investment Review Board ban on offshore buyers purchasing existing homes.
However, investment bank UBS has predicted those same imposts to result in an easing of demand in 2018, particularly as Australia’s comparatively high property prices result in price-sensitive investors seeking other destinations.
Juwai.com chief executive Carrie Law said she did not expect the behaviour of Chinese buyers to change markedly in the second half of2018, with prospective purchasers most attracted to Melbourne’s lower prices in comparison with Sydney, top universities and its vast and colourful cultural offerings.
Behind Melbourne and Sydney, Ms Law said a clear second-tier was emerging in Australia in terms of Chinese interest, with Gold Coast and Brisbane the leaders of the country’s secondary cities.
Ms Law said that second tier was being created largely because of activity by Chinese developers.
China-based developers recently active in Gold Coast and Brisbane include Beijing’s Peng Bo Group, which launched its first Australian project in late March, and Guangzhou R&F Properties, which unveiled a $500 million plan to develop a riverside mixed-use precinct in Brisbane’s West End in April.
“Some of the Chinese developers are also acquiring land there and they have been tailor-making products that appeal to the Chinese market,” Ms Law told Australia China Business Review.
“These developers, they have been successful in China, and they have a steady consumer base already.
“And they are actually more diverse than any other developers locally in Australia, or any other part of the world, in knowing how to talk or how to market to Chinese people.
“They also have more channels to create property tours or to create an atmosphere of urgency with locations and projects that are very popular and will be bought very quickly, convincing people they have to buy now and not later.
“They know how to create that phenomenon – it’s a very different sales atmosphere and dynamic.”
In Perth and Adelaide, state governments are focusing on developing new initiatives to boost international student numbers, to create flow-on benefits in other sectors of the economy.
However, Ms Law said for those flow-on effects to reach the property sector, more needed to be done for developers to understand the Chinese market, and for Chinese buyers to understand each city’s offering.
“Some developers have been aggressively marketing Perth as a great location, it has all the facilities, the great infrastructure developments and the government has been spending, to create more commercial opportunities and more jobs for investors or for people who aspire to invest in Australia,” Ms Law said.
“However, there is still a kind of perception that Perth is stuck 10 years behind.
“It’s still seen as up and coming, still a little bit primitive compared with other destinations in Australia.
“That’s the perception, to dispel that in China there needs to be more education, I believe.”
Juwai.com’s data correlates neatly with research released by Knight Frank earlier this year, which showed that more than a third of residential development site sales in Australia in 2017 were to Chinese buyers.
Chinese buyers accounted for 38.7 per cent of all residential site sales in Victoria, and 35.6 per cent of development plot sales in NSW.
Knight Frank said Chinese developers had been diversifying their portfolios in recent years, pursuing medium and lower-density projects, whereas historically their preference had been for higher-density development.
Around 29 per cent of all development site sales to Chinese buyers in 2017 were plots suited for low-density development, with 17.1 per cent considered appropriate for medium-density development.
In 2013 and 2014, more than 98 per cent of development sites sold to Chinese buyers were for high-density projects, Knight Frank said.