Chinese buyers spent a record US$101 billion on international real estate in 2016, according to a report by Juwai.com, the Chinese international real estate website.
The US maintained its position as the top recipient of investment capital with Australia coming in second. The report projects Chinese international property acquisition will be lower in 2017 at around US$80 billion, but will still rank among the top three years on record.
“This is the first time in history that Chinese buyers acquired more than AU$130 billion of international real estate,” said Sue Jong, Chief of Operations for Juwai.com.
The 2016 total represents a massive 845 per cent increase over five years.
“In Australia, we see that investment flows have decreased markedly from their peak, while remaining strong by historic standards. Capital controls, bank lending standards and foreign buyer taxes have combined to wind back the clock to 2015.”
Foreign Investment Review Board data shows that Chinese buyers were approved to purchase AU$23.8 billion of property in 2015-2016 and AU$18.4 billion in 2014-2015.
Following the US and Australia, the other top countries for Chinese investment by dollar value are Hong Kong, Canada and the UK.
The report says Chinese purchasing is driven by consumer demand for property overseas and global lifestyles, as well as strong corporate demands for international assets and opportunities.
“One driver of Chinese investment is that – despite China’s torrid pace of overseas acquisitions in recent years – it remains underinvested globally compared to other economies,” Ms Jong said.
“China ranks only 18th in the world by aggregate ownership of foreign real estate and other assets compared to GDP, at just 12 per cent. That is well below the OECD average of 42 per cent and lower even than Slovenia.
“We believe we estimate conservatively when we forecast that Chinese investors will acquire more than AU$2 trillion (US$1.5 trillion) of overseas assets in the coming decade or so as they close the underinvestment gap. Up to half this new investment could go to property,” Ms Jong said.
Melbourne-based Investorist, which provides software platforms for the real estate companies involved in buying and selling off-the-plan residential property and has been operating in China since 2014, surveyed 120 mainland China agencies to provide an understanding of Chinese investors.
Their property outlook report ranks Australia as the number one destination for Chinese buyers, followed by the US, UK and ‘Golden Visa’ countries including Spain, Portugal, Cyprus, Malta and Greece.
Investorist founder and CEO Jon Ellis said Golden Weeks and property buying holidays are also becoming increasingly popular.
“Investorist’s selling agents already arrange ‘propidays’ for groups of wealthy Chinese investors who want to combine business with pleasure. They effectively mix site visits with sightseeing during key Chinese holiday periods, and we expect the ‘propiday’ trend to increase for all the global gateway investment cities,” Mr Ellis said.
Investorist says many factors are fuelling the growth of Chinese investment in Australian real estate: a desire to diversify wealth into different assets; protecting generational wealth by investing in ‘safe havens’ outside China; increasing migration desire, and seeking better educational opportunities for children.