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Chinese investors are aggressively lifting their Australian residential property investment; Overseas property is a prized asset for wealthy Chinese. Vancouver, London, Sydney and Melbourne are the cities of choice.
Topic Started: 13 Oct 2014, 10:21 AM (770 Views)
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Chinese investors are pushing into Melbourne and Sydney

October 11, 2014
Simon Johanson

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In a sleek black display room in downtown Melbourne, Adrian Sum is getting ready to launch construction of his first joint venture Australian apartment project.

Mr Sum controls the purse strings of one of China's largest property developers, and the striking 63-level, 633 unit high-rise Eq Tower is state-owned Sino Ocean Land's first development foray outside the People's Republic.

It's a "defining moment for Melbourne", the tower's website states, That may be truer than the marketeers realise.

By Mr Sum's standards, Eq is small. His Beijing-based company's average property project is 10 times Eq's size, with the largest reaching 1 million square metres, roughly the size of eight full city office blocks.

Happy but not satisfied with his initial investment, Mr Sum is already on the lookout for more Australian assets. He also has a $200 million mandate to seed an office fund over the next year and, with joint venture partner ICD Property, is eyeing other opportunities in Sydney.

"Because the Chinese capital is huge and the direction to go overseas is quite clear, that means that this will accumulate," Mr Sum says.

He's not the only one. A new Chinese entrant, Sichuan-based Xiang Xing Group, this week spent $35 million buying a development-ready site in Melbourne's Southbank.

Another huge state-owned enterprise, Shanghai-based Greenland Holding Group, already has four projects on its books worth $1.4 billion.

Its signature $600 million tower on the former Sydney Water Board site will become the city's tallest residential building.

In North Ryde, China's richest woman, 33-year-old heiress Yang Huiyan, is heading up Country Gardens' $500 million project, and Fuxing Huiyu Real Estate has launched apartments worth $550 million in Parramatta.

Chinese investors are aggressively lifting their Australian residential and commercial real estate investment at a time when the Reserve Bank is warning bubbly property markets could be hit with a price correction.

Foreign investment has become an even greater force in driving up prices over the past six months, the property industry believes.

The October Australian Property Institute Property Directions survey found 96 per cent of Sydney respondents felt foreign investment was a significant driver, more than the 88 per cent it registered in May.

Australia's exuberant property market shows no sign of abating, pushed by fierce competition and local and international investor's enthusiasm.

Spurred by a record 15-month run of historically low interest rates, Australian dwelling values rose 9.3 per cent over the 12 months to September. Sydney's homes rose 14.3 per cent and Melbourne's 8.1 per cent over the same period, RP Data figures show.

Some property observers maintain the current frothy market is not an evolution but a revolution that is here to stay. With the world's wealth funnelling in, it is not difficult to see why.

Australia's property market is operating in an international context now, says Sam Nathan, a former analyst at Charter Keck Cramer.

Sydney and Melbourne are on a par with other global cities where apartment markets, particularly in city centres, are "now driven by geopolitical influences as international developers diversify from their country and market of origin," he says.

When Australia emerged from the 2008 global financial crisis with a stable economy and one of the strongest property markets in the world, it became a tempting foreign investment target.

The investment trickle became a flood as prices racheted up in London, and Singapore, amid fears of the island city's housing overheating, introduced restrictions on local and foreign ownership. They were soon followed by Hong Kong adding an extra 15 per cent stamp duty on overseas buyers and Canada cutting its millionaire visa program.

Aided by Australia's liberal foreign investment rules which allow unlimited sales of new homes, Chinese investors and newly arrived immigrants spent $24 billion on Australian residential real estate over the past seven years, a well-publicised Credit Suisse bank report estimates.

And they will spend nearly double that, another $44 billion, over the next seven, starting with about $5 billion this year, it says.

For the past two years China's central government has been relaxing requirements for outbound investments that require its approval.

"They know that to invest overseas can sometimes serve as risk management to balance their portfolio. This is not just happening to individuals, the whole country shares in this kind of mentality," Mr Sum says. "It is just the beginning of a long-term vision, this goal to go overseas.

"Even the corporates, like insurance companies, are starting to allocate a certain percentage of their investment portfolio into different overseas markets."

A new raft of easing policies will come in October this year, Savills' Hong Kong-based research director Simon Smith said this week. They are likely to further spur the flow of money heading overseas looking for better returns.

Overseas property is a prized asset for wealthy Chinese keen to park their money and mitigate the economic and political risk of having it tied up in the People's Republic.

Vancouver, London, Sydney and now Melbourne are the cities of choice.

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Read more: http://www.smh.com.au/business/chinese-investors-are-pushing-into-melbourne-and-sydney-20141010-113q7x.html
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Foreign buyers face tougher penalties for breaching real estate laws

October 13, 2014 - 12:00AM
Simon Johanson

Foreign buyers face tough new penalties for flouting property ownership rules, as well as capital gains losses and cross-matching with immigration records, under likely recommendations by a parliamentary inquiry.

Foreign investment in residential property has been the subject of an inquiry, chaired by Coalition MP Kelly O'Dwyer, which has delayed handing down recommendations until late November to allow time for consultation with state governments about introducing a national property owners register.

Ms O'Dwyer told Fairfax Media the inquiry was considering beefing up penalties for foreigners who flout real estate laws, to make them proportional to the value of the property purchased.

"The largest penalty fee that can be imposed is about $85,000. We have been told by many witnesses that that is simply seen as the cost of doing business," she said.

The inquiry was also likely to recommend that foreigners who are forced to divest a property lose the capital they have accumulated in the dwelling between buying it and selling.

The current system, which allows them to keep profits, was "clearly creating the wrong sort of incentive. It's creating an incentive for bad behaviour," she said.

Ms O'Dwyer renewed previous criticism about the performance of, and data collected by, the Foreign Investment Review Board, suggesting its information was flawed by assuming all foreigners followed the rules and submitted applications to buy property.

"I can't see any explanation as to why it is that there have been no prosecutions since 2006. I'm a bit bemused at what processes exist there [in the FIRB]," she said.

Read more: http://www.smh.com.au/business/foreign-buyers-face-tougher-penalties-for-breaching-real-estate-laws-20141012-114gvg.html
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miw
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Foreign buyers face tough new penalties for flouting property ownership rules, as well as capital gains losses and cross-matching with immigration records, under likely recommendations by a parliamentary inquiry.


I would have thought that more effort just needs to be spent on detection in the first place. Someobody is either eligible to buy or they are not eligible to buy. If they are not eligible to buy, then stop the transaction before it happens. It's not rocket science and it's what happens elsewhere.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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Dr Watson
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Edited by Dr Watson, 13 Oct 2014, 02:12 PM.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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Blondie girl
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It is glaringly obvious that Oz compared to the other countries do not offer as much restrictions to foreign ownership..

I thought that people who have been residents for just 12 months may qualifies to buy established property?? :bl:

Who wants to dabble with US shares & Euro bonds, which have been performing quite unstable.

What concerns me is this:

Do some foreigners go nuts @auctions & push up what should be realistically paid at the time?

Hmmmmm
That would seriously p me off if I was to compete with them... Might as well take 1 look see how aggro & excited the punters look & call it a day.

Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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Blondie girl
13 Oct 2014, 04:41 PM

What concerns me is this:

Do some foreigners go nuts @auctions & push up what should be realistically paid at the time?

Hmmmmm
That would seriously p me off if I was to compete with them... Might as well take 1 look see how aggro & excited the punters look & call it a day.

Good call Blondie - there isn't much choice for some people at the moment :)
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Dam
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Blondie girl
13 Oct 2014, 04:41 PM
It is glaringly obvious that Oz compared to the other countries do not offer as much restrictions to foreign ownership..

I thought that people who have been residents for just 12 months may qualifies to buy established property?? :bl:
If you really want to follow the rules ( and many dont, I know some tourists with properties here) you just have to register you or your kids at any university/tafe course, and go shopping.
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Blondie girl
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13 Oct 2014, 04:53 PM
Good call Blondie - there isn't much choice for some people at the moment :)
Why oh why is there sooo many unregistereds replying to me ?? Lol.
or
That you mmm? Go bloody register.
Dam
13 Oct 2014, 04:58 PM
If you really want to follow the rules ( and many dont, I know some tourists with properties here) you just have to register you or your kids at any university/tafe course, and go shopping.
Yeah
I believe what you say.

There's also school rorts, to enrol in those reputable...
Edited by Blondie girl, 13 Oct 2014, 09:32 PM.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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