The Real Deal New York

Thunder down under: Chinese investment in Aussie real estate leaps to $18B

Last year, China surpassed the US as the biggest foreign investor

April 11, 2016 11:07AM

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Crikey! China supplanted the United States last year as the number one foreign investor in Australian real estate, doubling its investment to $18 billion from $9 billion between 2013 and 2014.

The Australian government requires approval for foreign investment into the country, and China topped the list for the year that ended June 30, 2015, investing three times what the U.S. did, according to a report from Australia’s Foreign Investment Review Board.

After the U.S., Chinese investors are looking toward Australia, making it the second most popular destination for investment, according to Juwai.com, a popular international real estate portal in China, the Wall Street Journal reported.

Total foreign investment in Australian residential property increased 75 percent with $73.8 billion in the real estate sector, accounting for 50 percent of the value of approved investments, according to the Journal.

In the U.S., Chinese investment in the year ending in March was $28.6 billion, according to the National Association of Realtors. Chinese buyers now represent the largest contingent of foreign property buyers in the U.S.

In 2015, Chinese investors were behind $5.4 billion in deals — including Anbang Insurance’s nearly $2 billion purchase of the Waldorf Astoria  — in New York City commercial real estate. The Real Deal dubbed last year “the year of the Chinese investor.”

There is “immense pent-up demand” for international property among Chinese investors, Charles Pittar, chief executive officer of Juwai.com, told the Journal.

“China’s share has risen from less than one-tenth to more than one-quarter of all of foreign real estate investment in Australia since 2012. There will be ups and downs, without a doubt, but the long-term trend is up,” Pittar told the Journal. “This is important because it shows that the China bears who claimed Chinese investment was falling off a cliff are badly informed.”

The Journal reported some Chinese investors have become more cautious due to Beijing introducing new controls to prevent money from leaving the country. With the falling value of the Chinese currency, the renminbi, amid economic slowdown in the country, Chinese families and companies have been using legal methods — such as real estate investment — and illegal means to get almost $1 trillion out of the country through a process known as “smurfing.” [WSJ] — Dusica Sue Malesevic

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