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Chinese buyers of Australian real estate are losing billions as the Australian dollar falls
Topic Started: 9 Sep 2015, 12:21 PM (2,696 Views)
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Chinese investors lose $12b of Australian assets over three years as $A falls

September 9, 2015 - 10:59AM, 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 three 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.

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 billion, comes from real estate purchases. Another $9.2 billion comes from portfolio investment, $4.1 billion from students and slightly more than $6 billion 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 bllion comes from the immigration of almost 16,000 Chinese citizens.

Read more: http://www.smh.com.au/business/markets/currencies/chinese-investors-lose-12b-of-australian-assets-over-three-years-as-a-falls-20150908-gji57g.html
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John Frum
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So does Chineses can haz moar propertyz now?
Edited by John Frum, 9 Sep 2015, 07:19 PM.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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newjez
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Interesting contrast between those who bought in Australia, UK US and Canada.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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stubby
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newjez
9 Sep 2015, 01:58 PM
Interesting contrast between those who bought in Australia, UK US and Canada.
These are boltholes, not investments, whether the underlying money is "hot" or not.

The Vancouver, Canada RE market has been driven by Chinese demand since the early 1990s, first by expatriate Chinese demand prior to HK's return to China in 1997, then by mainland Chinese interest.

The Vancouver market has been through a couple of boom/bust cycles in the intervening decades, with some associated scandal and noise about condo-build-quality for Chinese-investor-oriented product, and some wild rides on the RMB/CAD cross over the years, but the base China-sourced demand has remained essentially constant.
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newjez
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stubby
9 Sep 2015, 03:12 PM
These are boltholes, not investments, whether the underlying money is "hot" or not.

The Vancouver, Canada RE market has been driven by Chinese demand since the early 1990s, first by expatriate Chinese demand prior to HK's return to China in 1997, then by mainland Chinese interest.

The Vancouver market has been through a couple of boom/bust cycles in the intervening decades, with some associated scandal and noise about condo-build-quality for Chinese-investor-oriented product, and some wild rides on the RMB/CAD cross over the years, but the base China-sourced demand has remained essentially constant.
I understand the sales talk, and I can see that it may be attractive, but sooner or later these guys are going to realise they are not out of the fall out zone. John Frums theory may have legs. It is quite possible we could see an exit of housing investment from Australia in the very near future. The corresponding argument, where the Asians buy the cheap dollar stinks of closing the stable door after the horse has bolted.

But we will know quite soon.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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hullaballoo
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newjez
9 Sep 2015, 04:32 PM
I understand the sales talk, and I can see that it may be attractive, but sooner or later these guys are going to realise they are not out of the fall out zone. John Frums theory may have legs. It is quite possible we could see an exit of housing investment from Australia in the very near future. The corresponding argument, where the Asians buy the cheap dollar stinks of closing the stable door after the horse has bolted.

But we will know quite soon.
Agreed newjez. The lower AUD will generally coincide with a weaker Chinese economy, which will both limit new Chinese investment, as well as coincide with some previous Chinese property investors being under financial strain due to the weaker Chinese economy. Additionally the potential new purchasers from China during a time of economic weakness will be strongly outweighed by the several years worth of properties bought when the AUD was much higher, those previous Chinese purchasers will be sitting on a loss with the decline in the AUD. If it goes much lower many will panic sell to cut their losses as well as to meet financial commitments crystallising as a result of the weaker economy and asset declines.

Interesting times ahead.
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John Frum
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hullaballoo
9 Sep 2015, 05:03 PM
Agreed newjez. The lower AUD will generally coincide with a weaker Chinese economy, which will both limit new Chinese investment, as well as coincide with some previous Chinese property investors being under financial strain due to the weaker Chinese economy. Additionally the potential new purchasers from China during a time of economic weakness will be strongly outweighed by the several years worth of properties bought when the AUD was much higher, those previous Chinese purchasers will be sitting on a loss with the decline in the AUD. If it goes much lower many will panic sell to cut their losses as well as to meet financial commitments crystallising as a result of the weaker economy and asset declines.

Interesting times ahead.

^^^ Bingo.

Nice to be reading more comments from intelligent and thoughtful bears of late.

A refreshing change from all the rambling, tinfoil hat ensconced goldbugs that pollute this forum, and a sure sign that the cult of Frum is spreading.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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herbie
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American money going into residential property here would do me for potentially speculative.

But I'm with Stubby on guessing the Chinese money going into residential property here is much more 'bolthole' orientated type stuff.

As well as a place for the kids to live as they do uni here and whatever.
Edited by herbie, 9 Sep 2015, 08:10 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Loki
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John Frum
9 Sep 2015, 01:07 PM
So does Chineses can haz moar propertyz now?
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“Talk sense to a fool and he calls you foolish.” - Euripides
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John Frum
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herbie
9 Sep 2015, 08:02 PM

But I'm with Stubby on guessing the Chinese money going into residential property here is much more 'bolthole' orientated type stuff.


That's because you're a scabby old racist drunk.
Loki
9 Sep 2015, 09:20 PM
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Look Out Herbie!!! They're heading straight for your bolthole(s) ...

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Edited by John Frum, 9 Sep 2015, 09:30 PM.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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