Chinese Investment In Australia Hits Record Levels

15 April 2016

In the week that Prime Minister Malcolm Turnbull leads Australia’s largest trade mission to China, a new report reveals the rising level of Chinese investment pouring into the country.

The Australian government’s Foreign Investment Review Board (FIRB) this week published its annual report under the banner headline that China was the largest source of outside investment in Australian real estate for the year to 30 June 2015

With Chinese investment totalling AUD24 billion, that’s treble the level of real estate investment coming from the United States and six times more than was invested from Singapore. This represents a two-fold increase on the AUD12 billion recorded in the previous year, when China surpassed the US as the biggest investor in Australian real estate for the first time. 

This comes at a time during which appetite for Australian real estate is soaring internationally. The total value of all approved foreign real estate investments grew by 75% last year to reach a total of AUD97 billion. This precipitous rise means property now accounts for 50% of all foreign investment entering Australia. 

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The looming question however is whether this makes Australia more vulnerable to China’s growth slowdown. This is up for debate, however with China’s economy growing by 6.7% in the first quarter of 2016 – safely within the expected range – there are signs that the Chinese economy is broadly stabilising. The sheer size of China’s growing middle classes – many of whom are seeking stakes in safe haven offshore markets – is also expected to balance out the impact of any modest deceleration in growth. 

Furthermore, while this data does not account for investment since July 2015, based on current activity, Chinese real estate agents have forecast that 2016 investment in overseas property will exceed even this buying spree.

Where is China investing? Over 90% of investment was directed at New South Wales – predominantly Sydney. Victoria and Queensland, home to preferred IP Global investment destinations Melbourne and Brisbane, accounted for just AUD1.2 billion and AUD240 million of Chinese investment respectively, so there is significant room for growth. 

The context for this news is also worth considering, with these two markets forging even closer ties over recent months. Australian Prime Minister Malcolm Turnbull will follow in the footsteps of other world leaders this week as he takes the helm of the country’s largest trade mission to China. He’ll be joined by 1,000 prominent business executives in talks that will focus on increasing Australian trade with China, which in 2015 was worth AUD150 billion.


 

Scott Hagerman

Written by Scott Hagerman

Scott has over ten years experience in investment advisory and financial planning services for individuals and businesses. His career began advising wealthy individuals and small to medium sized enterprises on risk management in the UK and the US, and has focused on wealth management and real estate investing since moving to Hong Kong in 2010. He has six years experience evaluating real estate investment opportunities in the US, Canada, UK, Malaysia and Australia.

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