A report released recently that estimates Chinese investment in Australian and New Zealand residential and commercial real estate has revealed that Chinese purchased property worth $17.4 billion in Australia in 2017. And in New Zealand, it was $1 billion. Carrie Law from Juwai looks at how that stacks up with previous years.
Listen to the interview now:
Transcript:
Kevin: A report released recently by juwai.com estimates Chinese investment in Australian residential and commercial real estate, and I’ll give you the figures in just a moment. There are other reports, of course, foreign investment review board issues a report, but that’s on approved investment. This gives you more of an indication about commercial and residential investment by Chinese, not always necessarily approved. So this gives us an idea on just how dynamic it is. It revealed that Chinese purchased property worth $17.4 billion in Australia in 2017. And in New Zealand, it was $1 billion.
Kevin: So how does that stack up to previous years, and where is it headed? Joining me to discuss that, Carrie Law, who is the CEO and Director of juwai.com, the number one Australian real estate portal. How does that compare with previous years?
Carrie: In year 2017, we see that in terms of the total transactions from Chinese buyers, especially mainlanders, is approximately Australian dollar 23.9 billion, which is a slight drop, as some jobs actually, as compared with 2016. Because the overall month, is approximately 26%, or 27% down by 2016.
Kevin: Yeah, 26.8%, that’s quite a drop. How much of an impact do you think the legislation, or changes to legislation in Australia in particular, have to do with that in terms of trying to restrict foreign investment?
Carrie: I think that both sides kind of pull and push effect. Because in terms of China, as a whole, for restricting capital outflow and then investing in the overseas real estate properties is considered as USD fifty thousand per year, and that’s just one thing Chinese buyer has been looking for ways in getting the money offshore, investing to all markets, not just Australian focus. And in terms of Australia’s we see that, say for example, Victoria as well as New South Wales, there are restrictions in terms of foreign buyers’ tax. So kinds of significant increments for non-permanent residents in terms of owning properties in Australia. So that is one thing has been restrict and slow down demand because getting also, in terms of money, some bank facilities to finance the projects is more difficult, as well. So that’s combined push and pull, we consider, is causing the changes in the market for this year. However, the next year, or this year, 2018, receive more direct increments, potential increments, in Chinese demand for homes in Australia.
Kevin: Are there any decreases or increases in other parts of the world? What would you say would be the most favoured area for people and why?
Carrie: Yes, you have good eyes, I think, Kevin. Especially because of the [inaudible 00:02:59] we see southeast Asia is actually up and coming and a lot of investments or actually developers are very aggressive in marketing to China and Chinese world. We see significant growth in this market, especially Asia, which is up about 352.4% representing a total of 32.9, close to 33 billion USD. So this is a major increment, as this is as expect as Juwai as well, in the last year.
Kevin: The difference between commercial and residential, your report, of course, combines them both, is there a preference for one over the other?
Carrie: I still think the demand in terms of residential is still higher, because it’s kind of like 80% of total transaction, meaning approximately 19.4 billion last year, and 4.5 billion for commercial, which is 20%, or 19% in the market. So people buying into Australia, they actually look for more lifestyle as far as education for their children. And only 40% of them are for investments. So maybe because of that, residential still more preferred.
Kevin: Thank you for your time, Carrie.
Carrie: Thank you, Kevin.
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Kevin Tuner worked in radio as General Manager of various east coast radio stations. He started in real estate in 1988 and was ranked in the Top 10 Salespeople in the state until he was appointed as State CEO 1992.
He operated a number of real estate offices as business owner and was General Manager of several real estate offices in Christchurch.
He now hosts a real estate show on Radio 4BC and a weekly podcast at www.realestatetalk.com.au. He is the host of a daily 7 to 10 minute podcast show for real estate professionals at www.reuncut.com.au.
To hear more podcasts by Kevin Turner, click here
Disclaimer: while due care is taken, the viewpoints expressed by interviewees and/or contributors do not necessarily reflect the opinions of Your Investment Property.
