Marketing your property to Chinese buyers

Chinese foreign investment makes up a significant amount of Australia’s real estate market.

A recent report by KPMG and the University of Sydney’s China Studies Centre revealed that Australia maintained its ranking as the most significant recipient of Chinese outbound direct investment since 2006. Direct investment into Australia also rose by 21% year-on-year in 2012.

While mining investments still dominate, there is growing Chinese investment interest in agriculture, renewable energy, and real estate, according to the report.

Typically, all foreign investors require government approval before purchasing real estate in Australia. There are also restrictions on the types of property a foreign investor is able to purchase.

According to the Foreign Investment Review Board, foreign investors who wish to purchase a new dwelling – purchased directly from the developer and has not been previously occupied for more than 12 months in total – need to apply for approval. Such applications are normally approved by The Treasury.

Foreign investors may also purchase vacant land to build a new dwelling, subject to foreign investment approval by The Treasury. Applications to acquire a single block of vacant land are normally approved, subject to the condition that the purchaser commences continuous construction within 24 months of receiving approval.

Similarly, foreign investors wanting to purchase land for residential development need to apply for approval. Applications are normally approved subject to the condition that applicants start continuous construction within 24 months of receiving foreign investment approval.

Foreign investors may also acquire established dwellings for the purpose of redevelopment – to demolish an existing habitable dwelling and replace it with multiple dwellings. A redevelopment proposal which does not increase the number of dwellings may be approved only where there is evidence that the existing dwelling is derelict or uninhabitable, using the valuation of the existing structures by a licensed valuer or a builder’s report.

Proposals for redevelopment are usually approved if the following conditions are met:

The existing residents cannot be rented out prior to demolition and development, and the existing dwelling must be demolished and continuous construction of the new dwellings must start within 24 months.

However, established (second-hand) dwellings are less accessible for foreigners.

Temporary residents may only acquire one established dwelling and it must be used as their primary place of residence in Australia.

Temporary residents need to apply for approval if they wish to purchase an established dwelling. These applications are typically approved if

• the property is vacant at settlement;
• the property is used as your principal place of residence;
• no part of the property is rented; and
• you sell the property when it ceases to be your principal place of residence

Foreign non-residents of Australia, or short-term visa holders, cannot purchase established dwellings unless it is for development. They can only investment in Australian real estate by acquiring new dwellings, off-the-plan properties under construction or yet to be built, or vacant land for development.

Another option for foreign investors is the Significant Investor Visa, which commenced on 24 November last year. It is designed to attract overseas investment and create a pathway for permanent residency in Australia. Applicants with AUD$5 million or more to invest in Australia can apply for the visa, without additional age, language, or residency restrictions. After four years, a permanent residency visa will be approved.

Under the Significant Investor Visa, investments in property are not considered complying investments that will count towards visa approval. However, investors may choose to invest in ASIC-regulated managed funds which may invest in Australian real estate.

Other factors are also extremely crucial when it comes to marketing your property to Chinese investors.

Modern Chinese investors may hold Western ideals, but other cultural superstitions and traditions still remain an important part of their lives.

For instance, house numbers can be a huge deciding factor for Chinese investors. The number 8, or any number with it (18, 28, etc.) is considered lucky as the number in the Chinese language sounds similar to the word for prosperity.

Another number combination that is considered lucky is 168, as its pronunciation is similar to the phrase “the road to prosperity”.

Conversely, the number 4 is considered an unlucky number as its pronunciation is similar to the word “death”. As such, house numbers with the number 4 will typically be unpopular amongst Chinese investors.

Some Chinese also have the belief that building a house facing North will bring ruin to the family.

Additionally, homes where traffic is angled towards the home will be avoided by the superstitious. Properties facing a T-shaped intersection are also considered not ideal, as some Chinese believe the oncoming traffic acts as a knife or poison arrow pointing towards their place of residence. The opposite is true for roads which have constant unhurried traffic.

Homes where one can see the back door directly from the front door are considered bad luck, as good energy that flows into the house will flow right back out. The idea is to have as much positive energy in the house as possible.

Staircases that lead straight out the front door are also avoided as the Chinese believe homes with this layout will see their fortunes go out of the door. However, this can be remedied by placing a green leafy potted plant to keep good fortune in the house.

The entrance of a home is the most important feature. It has been said a front door is best placed towards the left of the home, with a curved path leading towards it. Straight paths are said to lead evil spirits straight into the home. The surroundings also play an important part – there is a Chinese belief that lamp posts positioned directly in front of the front door will bring financial misfortune, while trees directly in front of the door will bring an imbalance of energy.

While your property may have one or more of these features, there are ways to increase the “positive energy” in every home. Some superstitions matter more to certain people than others – for instances, some buyers may overlook structural superstitions if a house is number 88 on a street with unhurried traffic.