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Tide turning on Chinese investor slump

Chinese investment in Australian real estate has hit its lowest level in six years, but experts say in the last few months Chinese buyers have been returning to the market.

The Foreign Investment Review Board’s (FIRB) annual report for the 2018-19 financial year revealed foreign investors from around the globe spent a total of $88.5 billion on Australian commercial and residential property, up from $51.9 billion in 2017-2018.

In the most recent reporting period, Chinese investment had slumped across all sectors, with Chinese real estate investment dropping to $6.1 billion – down more than 50 per cent from 2017-18.

Since 2013-2014, China has consistently topped the list and been responsible for more than 20 per cent of foreign property investments in Australia, but this year the Chinese share dropped to just seven per cent, behind investors from the US ($19.6 billion), Canada ($13.3 billion), Singapore ($9.8 billion), and Hong Kong ($9.3 billion).

Chinese global property portal Juwai’s buyer enquiry data showed Chinese investment in Australian real estate fell from late 2016 until the first half of 2019, largely due to Australian banks ceasing to lend to Chinese buyers, foreign buyer stamp duty and Beijing cracking down on the movement of money out of China.

But Juwai IQI Executive Chairman Georg Chmiel said the tide may be starting to turn.

“Chinese buyers seem to be coming back since the second half of last year,” Mr Chmiel said.

“In April, Chinese buyers made twice the number of enquiries on Australian real estate as in any other month so far this year and 50 per cent more than in any month in the second half of 2019.

“There may have been a great deal of pent-up activity taking place in April, so we don’t expect Chinese buyer enquiries to remain at this height for the rest of the year, but the data shows that Chinese buyers are back.”

Mr Chmiel said COVID-19 had forced the number of Chinese buyer enquiries down in February and March, but that Australia was already appealing as a safe country where your investments are protected.

“Now, the country seems to have managed the pandemic well. That makes it even more appealing to foreign buyers,” he said.

“Marketers in China are already using Australia’s good performance to persuade parents of children who have been studying in the US and the UK to look at Australia instead.”

According to Mr Chmiel, the biggest challenge in the first quarter has been travel restrictions which have prevented interested buyers – foreign and local – from getting to the closing.

“Now, the Australian market is beginning to open up slowly. That’s a positive development that will make marketing and closing sales progressively easier,” he said.

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