Florence Chong From: The Australian February 24, 2010
WHEN wealthy Chinese go abroad for their holiday, their shopping lists extend beyond high-end, branded luxury goods to real estate. Australian cities are now at the top of their shopping lists for property investment.
No statistics are available on the level of Chinese property investment, but a rough count of what top agents estimate to be their annual sales quickly runs into billions of dollars.
Sydney has been the focal point for Chinese buyers, attracted to its cosmopolitan nature and the abundance of inner-city apartments. Key agents in Sydney say Chinese buyers have been their largest source of offshore buyers at least for the past five years.
“I would estimate that around $200 million of my sales come from buyers from China each year,” says Harry Triguboff, Australia’s largest apartment developer. Triguboff, whose company Meriton has built thousands of apartments across Sydney, especially in central Sydney, says the portion of Chinese buyers in some locations could be as high as 60 per cent.
“Last year was my peak year. We sold between 230 and 250 apartments in Sydney to Chinese investors,” says Ray Chan, managing director of Henson Properties, in Sydney’s Chinatown. “There are probably around 30 agencies selling to the Chinese market. Collectively, they could likely sell as many sales as we do a year.”
During the past 20 to 30 years, Chan says, many of his employees have left to set up their own agencies targeting the Chinese market.
Expatriate Chinese George Wang, who runs AIMS Financial Services in Sydney, says there is plenty of money “sloshing around” in China wanting to find a home. It has been suggested that the Chinese are diversifying their risks out of China where fears of an asset bubble are rising.
Wang says while the bulk of their purchases are apartments priced between $500,000 and $700,000, the really wealthy ones buy houses, occasionally for up to $5m or $10m.
“Half of our clients buy to provide accommodation for their children studying in Australia,” Wang says.
AIMS has started to market houses and land in Melbourne — a relatively new market — to Chinese buyers. “We also sell residential subdivisions.”
Wang says only the extremely wealthy can afford to buy house and land in China. But Australian real estate, on the whole is cheap compared with prices in Shanghai or Beijing.
Triguboff and Chan say the Chinese have replaced other Asians — from Hong Kong, Singapore, Indonesia, or Taiwan — as their main market.
“We ride the migration waves. In the 1970s, it was people from Hong Kong, and then from Taiwan, followed by Singapore and Indonesia, but that changed in the last five or 10 years. It is now mainland Chinese,” Chan says.
“In the past five years, we switched our marketing to main Chinese cities: Guangzhou, Shanghai and Beijing.”
But Chan expects the strong Australian dollar to derail sales this year. “The Chinese buyers say when they buy property in China, their values could double in three years or 18 months in some instances. This is not the case in Australia.”
As well, he says the pool of potential buyers is also shrinking as many have found a property. Chan’s volume of business leads for commercial properties has fallen by 60 per cent to 70 per cent and for residential real estate is down 50 per cent this year.
Some Chinese investors have ventured into development, building blocks with up to 300 apartments.
Chan says those who ventured into development had been surprised at “how tough the laws are” in Australia.
“Some have put up their hands and say we just can’t put up with the red tape,” he says. But Wang says the buyers like the Australian system, as it is transparent and predictable.
