Chinese investors purchase $24 billion worth of Australian real estate each year

Mike Clarke/ AFP/ Getty Images

Chinese investment in foreign real estate reached a record $133.7 billion in calendar year 2016.

While investment has slowed somewhat in 2017, it’s still projected to top $100 billion by the end of the year according to Chinese property listing website Juwai.com.

In determining the total amount of property investments in Australia, Juwai.com used separate figures from the Foreign Investment Review Board which are compiled by financial year.

Of the total amount invested, Chinese buyers purchased $23.8 billion dollars worth of Australian property in the 2016 financial year. That was up from $18.4 billion in the year before.

While demand remains strong, Australian property investments by Chinese buyers are unlikely to remain at last year’s levels once results for the 2017 financial year are released.

“In Australia, we see that investment flows have decreased markedly from their peak, while remaining strong by historic standards,” said Sue Jong, Chief of Operations for Juwai.com.

“Capital controls, bank lending standards and foreign buyer taxes have combined to wind back the clock to 2015,” she said.

The effect of those tighter capital controls was seen earlier this year, with reports that 80% of Chinese buyers wanted to extend the terms of settlement on new apartments purchased off the plan, due to government-enforced restrictions on capital leaving China.

Despite that, the majority of foreign investment in Australian real estate still comes from China.

Data compiled by Credit Suisse in March showed that there were more than 1,500 properties purchased by foreign owners between October 2016 and January 2017, and 80% of those buyers were Chinese.

The report listed the top 5 countries for Chinese property investment in 2016, as follows:

    1. United States
    2. Australia
    3. Hong Kong
    4. Canada
    5. United Kingdom

Juwai.com’s report aggregates international purchases from both corporate and retail investors in China.

“It is based on Juwai.com’s own data and information gathered from both industry and governments,” the website said.

Perhaps not surprisingly, Juwai.com expects the rate of Chinese foreign property investment to continue growing in the years ahead.

Using a measure of total foreign asset ownership as a percentage of GDP, it said that China still ranks relatively low.

As the second biggest economy in the world, Chinese is 18th on the list with foreign asset ownership accounting for 12% of its national GDP. Juwai.com said the OECD average is 42%.

“We forecast that Chinese investors will acquire more than $2 trillion of overseas assets in coming decade or so as they close the under-investment gap. Up to half this new investment could go to property,” Jong said.

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