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Why Sydney Property is Cheap - Prices in Shanghai and Beijing can hit $30,000 a square metre; Not only is Sydney priced OK for China’s rich, it has a thing that’s pretty rare in China: blue sky
Topic Started: 31 Aug 2015, 08:01 AM (1,938 Views)
Kris Sayce
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Oh shit...Oh shit...Oh shit

http://www.dailyreckoning.com.au/why-sydney-property-is-cheap/2015/08/29/

Why Sydney Property is ‘Cheap’

Callum Newman August 29, 2015

There are a lot of things said about Sydney. But have you ever heard anyone describe its real estate as cheap?

Well, I did last week when I spoke to a consultant and researcher based in China, Shaun Rein. He’s also the author of two books on China. He deals with a lot of wealthy Chinese businessmen.

And he told me that for them, Sydney is cheap. That’s because real estate prices in Shanghai and Beijing at the top level can hit $20,000 to $30,000 a square metre. Even US$3 million doesn’t get you into the best part of town.

In the US and Australia it can get you a mansion on the beach.

Not only is Sydney priced OK for China’s rich, it has a thing that’s pretty rare in the big cities of China these days: blue sky.

That’s because the pollution in China is so bad it’s toxic. The air in China’s mega cities is so rancid it’s breaking world records. ‘Smog days’ are declared to keep kids from going outside, or to school.

It’s driving wealthy Chinese buyers to put their families out of harm’s way. That means buying here. And Chinese pollution is a problem, according to Shaun, that will take 10–15 years to solve.

So don’t expect the money to slow down anytime soon. We’re not the only one with the problem here. The same is happening in New Zealand.

Bloomberghad this last week:

‘“Five years ago I would have estimated two or three percent of Auckland properties were bought from overseas,” said Peter Thompson, managing director of Barfoot & Thompson, which says it sells one-in-three homes in the so-called City of Sails. “These days it’s 10 or 12 percent.’

And the falling Kiwi and Australian dollars only exacerbate the problem.

Bloombergreported last week that real estate prices in Auckland are up 20% this year. Here’s the catch if you are a local buyer: there’s really no change in the price for those buying from overseas, because the New Zealand dollar is down at the same time.

But there’s more to this story…

Are you watching this sector?

What’s interesting is the report yesterday from the Australian Financial Review where we can see the merger of two trends worth tracking. First is the foreign money coming into Australian real estate. The second is the bright outlook for agriculture to feed China’s growing middle class.

The paper says that Chinese retail and supermarket giant Dashang Group has spent close to $50 million buying rural property here. This is as it expands towards its goal of becoming the lead importer of Australian beef into China.

Food security is one of the Chinese consumer’s top priorities. Countries like Australia offer trustworthy supply chain management systems and high standards of animal and product care.

But it’s not only the Chinese supermarket making moves here. Last week came the news that First State Super made its first agricultural investment in Australia to the tune of $150 billion. It bought almond plantations across three states from Select Harvests. First State will lease the land back to Select Harvests.

Then yesterday the AFR reported that First State’s chief investment officer, Richard Brandweiner, said the super fund, ‘First State would continue to assess opportunities in the agriculture sector as they came forward.’

To give you the scale of the possible shift, Australia’s super funds only have about 0.3% of their investments in the ag sector, according to accounting group BDO.

Greg Canavan’s readers won’t be surprised by this. He foreshadowed these moves back in December last year.

He wrote at the time:

‘The Australian agricultural industry should benefit from the emergence of a larger Asian middle class in the years ahead. This could be a secular change, resulting in billions of dollars of new investment in the industry, of which XXX will be a beneficiary….

‘The mainstream media and others have made much of the fact that the ‘mining boom will give way to the food boom, making agricultural investments the next big thing.

‘But it’s not as simple as that. The industry requires billions of dollars of investment to improve productivity (increase yields, create more efficient supply chains, etc.) for that to happen.

‘And that takes time.

‘Having said that, it is still an attractive sector, given its strategic nature. People need to eat and countries want to secure reliable food supplies. And they will pay for the privilege to do so.

‘Another boost for the industry is the decline in the dollar. A falling dollar makes Australia’s agricultural products more competitive on a global scale and helps offset any price falls that might occur in US dollar based commodities, like wheat or beef cattle.’

Apologies for blacking out the stock at the top there, but I’m not at liberty to reveal that. What IS interesting about that stock is that it’s a perfect example of his new fusion method of finding good stocks. Greg combines his fundamental analysis with the technical analysis of Quant Trader’s Jason McIntosh.

That particular stock is up nearly 80% since Greg tipped it.

Regards,

Callum Newman

Associate Editor, Cycles, Trends and Forecasts
Money Morning Australia
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Bardon
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Blue skies all round then I think.

Just finishing of a major reno on my PPR, its on a corner block and I got approval to change the address to the intersecting and more expensive street. Plus I got to pick the number which is now "8". I have just installed a very nice big polished and lacquered copper letter box with a wall plate with a huge 8 stenciled on it and the street name below.

It comes up really nice with brasso and elbow grease, especially when the morning sun directly reflects off it.
Edited by Bardon, 31 Aug 2015, 08:12 AM.
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Ex BP Golly
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Bardon
31 Aug 2015, 08:09 AM
Blue skies all round then I think.

Just finishing of a major reno on my PPR, its on a corner block and I got approval to change the address to the intersecting and more expensive street. Plus I got to pick the number which is now "8". I have just installed a very nice big polished and lacquered copper letter box with a wall plate with a huge 8 stenciled on it and the street name below.

It comes up really nice with brasso and elbow grease, especially when the morning sun directly reflects off it.
You deserve an OAM.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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Bardon
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Ex BP Golly
31 Aug 2015, 09:17 AM
You deserve an OAM.
Thanks for the nomination Ex-BP, I wouldn't have expected to find any recognition for my many services rendered around here.

The address change probably added $100K to the value for Aussies and maybe $200k for Mandarin speakers, that's at today's money of course.
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createdby
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Blue skies are worth $12 billion dollars



http://www.afr.com/markets/chinese-investors-lose-12b-of-australian-assets-over-three-years-as-a-falls-20150908-gji57g



Chinese investors lose $12b of Australian assets over three years as $A falls
Sep 9 2015
by Rose Powell

Chinese buyers of Australian real estate and commodity companies have lost about 30 per cent, more than $12 billion, off their local investments in the last two years.

Chinese citizens invested slightly more than $40 billion in 2012 and 2013 according to purchases and partnerships tracked through the Foreign Investment Review Board (FIRB).

But the falling Australian dollar, which has shed 34 per cent since the end of 2012 by falling to about $US0.70 from $US1.04, has carved 30 per cent off these investments as it fell against the yuan, which is pegged to the US dollar.

The Chinese yuan is traded, but controlled by Beijing, which set the middle point of its trading range each day. It fell by slightly more than 3 per cent in early August after its midpoint was lowered.

"Based on FIRB approvals, $18.8 billion was invested in the resource sector in the 2012 and 2013 financial years," said David Chin, managing director of investment group Basis Point.

"During that two-year period, the All Resources index averaged 4356. Today, the index is 2816, equating to a loss of 35 per cent if the index is used as a gauge of investment performance."

Chinese investors have contributed $92.6 billion to the national economy in the last three years through investment and migration, statistics show. About 24 per cent of that total, some $22.5 million, comes from real estate purchases. Another $9.2 billion comes from portfolio investment, $4.1 billion from students and slightly more than $6 million through the Australian government's Significant Investment Visa program, which grants a four-year provisional visa to people who invest at least $5 million in the country.

An additional $12.3 million comes from the immigration of almost 16,000 Chinese citizens.

Chinese investors who bought off-the-plan apartments in 2014 have watched their property investments climb more than 40 per cent mostly because of growing property prices and the combined currency gap.

"To be fair, investors from the US have lost as much money due to the Australian dollar weakness and assuming their foreign exchange risks were not hedged,' Mr Chin says.
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The Whole Truth
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Forget the fundamentals
Don't worry about interest rate rises
Just borrow as much as you can
And Buy Sydney! Prices have reached a permanently high plateau and will not fall from here
Anyone who is bearish on Sydney will go broke
Sydney will lead the boom in jobs Australia wide and soon everyone will be able to afford a home, or 4.

Or of course we could fall into a depression and all the recent paper gains will be lost.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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Ex BP Golly
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Prices in Australia can reach up to and beyond $30,000 psm.

Ultra rich everywhere can sorted that amount.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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hidflect
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Yeah, yeah, yeah. Oz is cheap. So is the Kalahari desert. The difference is, you don't get to live in a vibrant, exciting and entertaining part of the world full of style, interesting people and opportunities. I promise you; not 5% of those Chinese investors would actually choose to live here over their own country. Anyone who's spent more than a few years outside of Oz knows this place is dull. Especially Perth. But Sydney, etc aren't far behind.

Perth takes out 'most boring' crown - News
https://au.news.yahoo.com/thewest/video/watch/29428255/perth-takes-out-most-boring-crown/
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Loki
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hidflect
9 Sep 2015, 09:56 PM
Yeah, yeah, yeah. Oz is cheap. So is the Kalahari desert. The difference is, you don't get to live in a vibrant, exciting and entertaining part of the world full of style, interesting people and opportunities. I promise you; not 5% of those Chinese investors would actually choose to live here over their own country. Anyone who's spent more than a few years outside of Oz knows this place is dull. Especially Perth. But Sydney, etc aren't far behind.

Perth takes out 'most boring' crown - News
https://au.news.yahoo.com/thewest/video/watch/29428255/perth-takes-out-most-boring-crown/
That was a very spirited defense of their city by the State's premier and opposition leader. Apparently Perth has got sky and beaches. What more could you want?

Sydney is pretty dull. I recently planned a trip OS, and much of my research via Google led me to Trip Advisor or the official tourist site. So I thought "Why not look up some top 10 attractions for Sydney on Trip Advisor." Fark me. Dull, dull and fucking dull. Apparently Sydney also has sky and beaches. And a funny looking opera house. Even Melbourne looks more interesting, but no sky :(

When I moved to Sydney in 87, there were these things called "pubs" on every major corner that sold beer and had live bands playing. But a bunch of whiney dislikeable persons moved into the inner city and complained that the pubs were "too noisy". Yeah, no shit Sherlock. Anyway, property values and greed above all else, so now the pubs are gone. And there were great restaurants that served great food at an unbeatable price, and may not have paid any tax. GST killed those. Now the Sydney food experience is mostly an expensive, pretentious wank fest. Sigh.



“Talk sense to a fool and he calls you foolish.” - Euripides
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Will
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hidflect
9 Sep 2015, 09:56 PM
Yeah, yeah, yeah. Oz is cheap. So is the Kalahari desert. The difference is, you don't get to live in a vibrant, exciting and entertaining part of the world full of style, interesting people and opportunities. I promise you; not 5% of those Chinese investors would actually choose to live here over their own country. Anyone who's spent more than a few years outside of Oz knows this place is dull. Especially Perth. But Sydney, etc aren't far behind.

Perth takes out 'most boring' crown - News
https://au.news.yahoo.com/thewest/video/watch/29428255/perth-takes-out-most-boring-crown/
I don't disagree with you. I must say, I wish more of our politicians would spend more time in Berlin, or London, perhaps Barcelona, even Kiev. More time overseas generally.

That way, I would hope we wouldn't have the kinds of rules and regulations from the Brisbane city council, our police forces would be run differently, We would be given more ownership of our communities. As it stands we seem to keep voting in people who have done their apprenticeship been on body corporates of apartments.

For those that don't know what I mean, a mate of mine at palm beach, on the Gold Coast, he needs to seek permission to have a fish tank in the apartment. No kidding, possible risk of water damage you see.
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