The Australian parliament is holding an inquiry into foreign real estate investment, triggered in part by anecdotal evidence of domestic buyers being beaten at auctions by foreign nationals, especially Chinese.
It’s not just tabloid fervour though: Credit Suisse expects Chinese residential property investment in Australia to reach $44 billion over the next seven years. Serious money. And NAB chief economist Alan Oster noted recently that foreign buyers now account for 13.9% of total new property demand in Australia.
Australia’s not the only target. Rich Chinese are looking all over the world for property investment opportunities.
Beijing just held its annual Spring Real Estate Trade Fair and there were 300 real estate projects featured from Canada, the United States, Australia, Europe and Southeast Asia, the South China Morning Post reports.
Homes in certain European countries like Spain whose economies were ravaged by the GFC are among the most attractive buys.
A couple of drivers for investors stand out. First, immigration – the ability to leave China and have their children educated overseas. In Australia, temporary residents are able to purchase property. From the report:
Immigration is part of the long-term plans for Howard Liu, who is a manager at a real estate development company based in Beijing.
Although his son is only five years old this year, Liu has already been searching for a place in either the US or Canada for his son to live in when he goes to secondary school.
“It’s not too early [to buy fixed assets overseas]. Now the yuan has been depreciating, and the risk of holding assets in China is turning bigger. So the timing is right for me,” said Liu, who has a budget of five million yuan for his first flat in a foreign country.
“Some of my friends have similar thinking to mine. We would work in Beijing, and our children would continue studying here for the next few years. But we can get the green card first to travel abroad conveniently.”
Second, the smog in Beijing is infamous and one of the marketing points for the agents selling overseas property in China is the cleaner air.
“In China, people are getting rich, but their concern about air pollution is increasing, and the social pressure in big cities is great,” investment consultant Tommy Chen Hongtao says. “We are sure more and more people would like to move to other countries for a breath of fresh air.”