Thursday, August 11, 2022

Chinese investors waiting to snap up Australian property once travel restrictions are lifted

Chinese investors

Chinese property investors are lying in wait to snap up cheap real estate deals in Australia once coronavirus travel restrictions are lifted

Chinese property investors are lying in wait to snap up cheap real estate deals in Australia when coronavirus travel restrictions are lifted.

Chinese real estate firm Juwai IQI said they expected foreign buyers to Australia’s capital city markets where prices are expected to stagnate or fall.

New data from the property portal showed that while inquiries from China are down 14 per cent, demand from local buyers has fallen even further, The Australian reported.

We still have strong demand from Chinese buyers for Australian property, but getting them to the transaction is harder than normal at the moment, the company’s executive chairman Georg Chmiel said.

Australia, so far at least, has managed the pandemic well and looks even more appealing to foreign buyers than in the past. Marketers in China are already using Australia’s good performance to persuade parents of children who have been studying in the U.S. and the UK to look at Australia instead, Georg said.

Under foreign investment regulations buyers from overseas are only permitted to buy new dwellings.

But with Australia already facing an oversupply in off-the-plan apartments, Core Logic’s latest figures suggest Sydney and Melbourne are at ‘higher risk’ of a significant downturn.

And given that migration is all but non-existent at the moment with travel bans and border closures in place, it’s likely vacancy rates will continue to shoot up in 2020 causing real estate prices to sink.

Auction clearance rates have halved from 76.6 per cent in the week ending March 1, to 33.8 per cent in the week to April 19.

This is partly due to the shutdown of in-person auctions on March 24 and the closure of Australia’s border to Chinese travellers which was enacted on February 1.

But on Saturday May 9 the restrictions on in-person auctions will be eased in New South Wales and a number of other states, while staying in place in Victoria.

Although rental yields are tipped to be lower as the crisis rolls on, China expert Professor James Laurenceson said cashed-up property investors are likely to maintain an interest in Australian apartments.

Traditionally they have focused on the big capital cities, so it would be Sydney and Melbourne with the Gold Coast a close third, he told Daily Mail Australia.

Professor Laurenceson, the acting director of the Australia-China Relations Institute (ACRI) at the University of Technology, Sydney, said the Chinese economy would also better withstand COVID-19 – giving its citizens more money to spend abroad.

Despite the coronavirus shock to the Chinese economy, its wealth hasn’t disappeared, he said. There’s been no property price collapse in China and property is one common form of asset for Chinese households.

While the influx in capital from international investors could be a good thing which may help drive Australia’s economy through the coronavirus crisis, some Australian politicians have sounded the alarm and warned the government body charged with approving foreign takeovers to be vigilant.

Federal Liberal backbencher Andrew Hastie said the Foreign Investment Review Board needs to ‘keep its guard up’.

We’ve taken some big economic hits and we need to protect ourselves from predatory behaviour, he told Daily Mail Australia.

Authoritarian states will be looking to snap up distressed businesses and assets, particularly ones that are critical to global supply chains — like aviation and cargo freight, the member for Canning said.

But when it comes to the real estate sector, some economic experts say the threat posed by China is over-hyped.

Martin North, the Principal economist at Digital Finance Analytics, told Daily Mail Australia on Monday there is no evidence to suggest there will be a surge in Chinese property investment when travel restrictions are eased.

There have been a lot of events and fairs to try and attract Chinese buyers back into the Australian market, that is quite clear, he said. That is because the local market [in Australia] is quite weak, there are apartments that have already been built but haven’t sold yet.

But the economic base in China is not that strong and the Chinese economy, and households, are struggling themselves post COVID-19 and the debt numbers in China are a lot higher than they were, he said.

North says the authoritarian regime will also look to make it much harder for investors to get money out of China.

China has had issues with too much money flowing out of the country so they are trying to get people to invest in China rather than internationally, he said.


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