Australia identified as a 'key target' by Chinese insurance funds

Katherine JimenezDecember 7, 2020

China's love affair with Australian real estate market is growing, with at least $1.5 billion set to be invested locally in over the coming years.

Recent research from CBRE revealed that Chinese insurance funds, alone, had about US$14 billion available for overseas real estate investment. Australia was among a handful of countries it identified as "key targets" for that money.

Underpinning the attraction said Cushman & Wakefield director of investment sales, Mr Tony Dixon was that "Australia was high yielding".

Yields had been compressing in other regions of the world, he said, but that it hadn’t happened to the same extent in Australia. Political stability, transparency and the positive property fundamentals were also appealing.

In the last 12 months, he estimates more than $1 billion has been spent by Chinese investors buying local real estate.

In a paper last month on Chinese investment in Australian property, Colliers International identified that investment was coming from four major sources: Banks and financial institutions; Developers with global ambitions;  large state-owned enterprises (SOEs) and China sovereign wealth funds (SWFs) and high net worth individuals.

The Colliers paper also said that while the increase in Chinese investment in the Australian residential property market has been widely reported, statistics show that Chinese investors are putting their money into a wide range of commercial property assets.

“While first time private investors may start by looking at residential investments, the more experienced investors have a broader appetite, and we’re receiving interest across a range of asset classes from farmland and wineries through to retirement, hotel, retail and large office building assets,” said Steam Leung, director of investment sales at Colliers International, who heads up the company’s Asian Division.

“However the most common enquiries are seeking Commercial A and B-grade offices and residential sites.”

Colliers estimates that Chinese investors have spent more than $600 million in the year to date on residential development sites in Sydney alone, with plans for almost 5,000 units on these sites.

Mr Dixon said that the indication from Chinese groups was that at least a further $1.5 billion could be invested in Australian real estate. But he emphasised that "if deals show themselves, they will do a deal".

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