property news: ​foreign investment in australian real estate

property news: ​foreign investment in australian real estate


March 2020
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Property News: ​Foreign investment in Australian Real Estate

There is a rapid increase in Australian Real Estate industry, and not surprisingly, main investors are of Chinese origin. In just last year only, investors and immigrants bought residential property worth of more than $8 billion in Australian. And the demand is growing exponentially, it has been forecasted that a further $60 billion will be put into an already fledging real estate market in Australia, in the next six years.

According to a Credit Suisse analysis – Chinese investors have acquired $8.7 billion worth of property in 2013-14 only, which a 60 per cent increase in the previous 12 months.

Expert analysts in the real estate business have been reporting that the Chinese money pushed into Australian housing has been equal of 15 per cent of national housing supply. Furthermore, there is an expectation of extra Chinese request for Aussie housing over the next six years, reaching to 2020. The increasing demand has been more than doubled in the past 6 years, reaching to $28 billion now.

The real estate financial report also concluded that the new foreign investment rules (passed recently) may make Australian real estate less interesting for Chinese (or other foreign) buyers, but it will also calculates that seeming loss of demand will be minimal.

It is foreseen that, as Australia seems on the doorstep of the maximum wealth creation in three centuries, despite moderating growth, more money from China is expected to come into Australian economy.

According to the team of real estate experts, for foreign investment demand, all proposals should be adjusted to focus on new housing schemes and away from established residential real estate. That can be a far more productive and positive option for the Australian economy, as it will give more options for job creation and related industry.

The experts also pointed out that, so far properties bought by Chinese investors were concentrated in Sydney and Melbourne, which -in terms of house-price-to-income ratios- made these cities among the most expensive and highly ranked cities in the modern developed world. These two cities (Sydney and Melbourne) has received $7 billion or 80 per cent of current Chinese demand.

Both of these Australian cities now rate higher on this valuation measure than usually exorbitant cities of London, New York and Tokyo.

Growth in Chinese demand for Australian property would also be supported by two per cent growth per year in the new settlers coming from China and Hong Kong, while it was previously assumed the investment flows from Chinese buyers would grow at a rate of five per cent per annum.

There has been around 1.2 million Chinese with cash worth of more than $US1 million in China, the report said, who can easily afford to buy an apartment in either Sydney or Melbourne. Similar projections come from Credit Suisse forecasts, which calculate the growth rate of Chinese millionaires over the medium term will be around 14 per cent a year. Accepting that, the number of USD millionaires is probable rise to 2.6 million by 2020, which is more than the current population of Brisbane.

Image source: The Australian