Cashing in on Canada's Chinese immigration policy shift: Australia's fillip then the fallout
Canada's recent policy shift on immigration along with its previous foreign ownership outlook will ensure there is more interest from Chinese buyers in Australian property.
In the short to medium term, the Chinese investor will increasingly consider the safe haven destination of Australia.
But there will inevitably be fallout here too, after the fillip.
For many years Canada ranked among the top choice for Chinese investor-immigrants given its relaxed immigration policies and generous health and education systems.
But this month Canada scrapped its longstanding Immigrant Investor Program, which allowed individuals to effectively buy permanent residency.
The most recent data shows Chinese immigration constitutes around 11.5% of all immigrants to Canada. It has been suggested the scheme has enabled more than 130,000 people to migrate to Canada since 1986.
While the IIP was aimed at all nationalities, immigration consultants have suggested the message arising from this month's policy adjustment was Canada doesn't want the Chinese investment. It's not entirely the case as while they have cancelled its visa program that granted permanent residency to those who committed 800,000 Canadian dollars to a five-year zero-interest loan to one of the country's provinces, it is set to be replaced with a program requiring immigrants to invest money, rather than just loan it.
It appears the program which began in 1986 saw applicants achieving residency but many staying in China which was causing the undercurrent of community consternation.
Also putting a chill on Chinese investment in Canada, the Canadian government astopped Chinese state-owned acquisitions of energy assets in 2012.
Soe 46,000 applications for the Canadian visa are now going no-where.
Australia's significant investor visa program only dates back to 2012 allowing immigrants a residency visa if they invest $5 million into a local business or approved managed funds, including state government infrastructure funds.
So far, the slow-burning SIV program has attracted around 600 applicants, of which around 90% have been Chinese nationals.
Despite the difference in applications, Australia sits as one of the most sought-after property investment markets globally among affluent Asians, and not just among the Chinese, according to recent HSBC research.
Click to enlarge
HSBC’s international property investment research looked as affluent individuals across seven Asian countries to understand their international property investment appetite.
Alice Del Vecchio, head of mortgages for HSBC in Australia, said the research found that more than a third (37%) of affluent Asians currently own an investment property overseas with many of them looking to invest further in the next 12 months.
"Looking ahead, interest in Australia is expected to remain strong so our economy is set to be a key beneficiary as foreign investment activity can help increase the supply of new housing by stimulating construction," she said.
According to the research, Australia is currently the number one destination for offshore property investment among wealthy Indonesians, while Malaysians and Singaporeans ranked Australia second.
For the rest of Asia, 9% of affluent Chinese, 10% of those from Hong Kong and 18% from India are currently invested in Australian property.
Del Vecchio credits Australia’s appeal amongst Asian investors to its proximity, quality education and lifestyle.
"It’s no surprise that Australia is highly regarded among affluent investors from Asia.
"Close to 70% of Australia’s international students are from Asia, many of which stay in Australia long-term to work or reside.
"We know from our own customer base that a large proportion of international mortgages in the past year have been located near universities."
Interestigly HSBC’s research indicates that investors across the region are broadening their scope from traditional property markets like Sydney and Melbourne to Queensland and ACT.
Of the affluent Asians looking to buy in Australia in the next year, 25% intend to buy in Queensland, 23% in ACT, compared to 20% in Victoria, 18% in New South Wales followed by 16% in Western Australia.
The HSBC report had over 7,000 respondents with at least $44,000 cash deposit in the bank, spread over seven Asian countries.