Chinese property buyers are losing interest in Australia, due to the tougher government regulations and new tax rules, according to a recent report published by The Herald.
Based on the data revealed by Juwai.com, a Chinese international property portal, the number of Chinese inquiries in Australian residential property has gone down 9.7 percent in the first half of the year compared to the same period in 2016. The median inquiry price has also reduced to about $350,000 from $394,000.
Chinese property buyers turn away from Australia
As the Chinese regulators adopted new guidelines in an attempt to restrict Chinese corporation investment overseas, the number of new developments in the Australian property market has also gone down.
Australia has been the second-most popular country in the world for Chinese investment. “Their top goals are risk diversification and children’s education,” said Jane Lu, the Australian head of Juwai.com. She thought Australia is very appealing both areas.
However, the new tax rule applied by the Australian government make some Chinese buyers retreat from the property market. For example, New South Wales doubled its foreign-buyer surcharge to 8 percent, while Queensland implemented a 3 percent surcharge.
As Chinese buyers turn away from Australia, US remains the top destination for them.
Chinese outbound property investment reached nearly $34 billion in 2015, doubling that of 2014, according to a recent report of Knight Frank. Knight Frank is a London-based global real estate consulting company providing global residential and commercial property advisory services.
Chinese Outbound Property Investment Doubled In 2015.
Driven by the softening of Chinese market conditions (devaluated Chinese currency, turbulent Chinese stock market, and fierce domestic competition), the growth of Chinese overseas property investment is an indicator that Chinese investors are now considering the overseas property market as a relatively safe haven among their alternative investment portfolios.
Chinese outbound property investment activities in key global cities. (Source: RCA, Knight Frank)
Gateway cities in the developed markets of the US, UK and Australia have been the top destinations for the Chinese outbound property investment in recent years, according to the report. In 2015, Manhattan has become the top investment destination for the Chinese property investors, followed by Sydney and Melbourne, and London.
With the Chinese government policy encouraging firms to expand overseas, the report predicts that the growth of overseas property market will continue to be driven by Chinese institutional investors, banks and developers in 2016.
Hong Kong’s New World Development Company is preparing to offer a $7 billion buyout of its China unit, reported Bloomberg.
Controlled by the Cheng Yu-tung family, New World Development is planning to buy the shares it does not already own in New World China Land Ltd., which is worth about $2.1 billion based on New world China’s last closing price.
Billionaire Cheng Yu-tung spoke at a public event in Hong Kong.
In 2014, New World Development tried to take the China unit private for $2.4 billion, but the attempt was rejected by minority investors. This time, the company is holding more money for the offer after a rights issue and last year’ strong sales.
The China unit has residential, retail, office, and hotel projects in more than 20 cities in mainland China. New World Development and companies associated with Cheng already own about 70 percent of New World China, according to exchange filings.
The United States is the top investment destination for Chinese property buyers this year, according to the latest report released by Juwai.com, reported China Daily. Juwai.com is a Chinese-language international property portal catering to Chinese buyers.
A quarter to half of all buyers start hunting for property without any particular country in mind, according to the report. “The country where the property is located can be less important. More high-net-worth buyers are beginning to search by property price and lifestyle,” said Andrew Taylor, co-CEO of Juwai.com.
The property could be in any country, however, it has to be close to a major international airport or a well-known University. The traditional gateway cities are still the top choices, but Chinese investors also look into newer destinations which are growing fast or have a big growth potentiality.
In the US, in addition to New York City, Los Angeles, Philadelphia and Houston, emerging cities which drive more Chinese clients to purchase include Honolulu, Detroit, Charlotte, Chicago and Austin, according to the report.
The Internet and word of mouth are two major channels for affluent Chinese and emerging middle class to buy property overseas, said Taylor.
Juwai now has established relationships with Chinese buyers and the real estate agencies in places like the US.