Chinese to continue investing in Australian real estate in 2016: Knight Frank
Chinese investment in Australia’s real estate market has not declined despite fears that the RMB’s devaluation and stock market crisis there would impact outbound investment, and the trend is expected to continue, according to a Knight Frank report.
Chinese investor — big and small — appetite for overseas real estate was also supported by the growing need for diversification from the Chinese market, says the report.
The China-Australia Free Trade Agreement, the Qualified Domestic Individual Investor or QDII schemes are expected to drive more Chinese investment in the Australian property market, says Knight Frank’s second global China Outbound Real Estate Investment report: New Waves, New Destinations.
Sydney and Melbourne alone attracted a total of US$3.8 billion in Chinese investment in 2015, next only to Manhattan, New York at US$5.78 billion.
Total Chinese outbound capital doubled to nearly US$30 billion in 2015 from 2014, according to the report.
“Investor interest in Australia, particularly in Sydney, has not diminished as many had feared – even after the latest RMB devaluation and with demand for natural resources weakening,” said Knight Frank’s head of Research & Consulting, Australia, Matt Whitby.
“Australian prices, coupled with strong Chinese buying power and continued weakness in the Australian dollar, has continued to attract capital inflow.”
Chinese investment into the Sydney and Melbourne markets skyrocketed in the from 2010-2015 period, added Knight Frank’s head of Asian Markets, Australia, Dominic Ong.
“Given the level of growth that we have experienced over the past five years, we anticipate that the outflow of Chinese investment into Australia will remain at steady and strong levels but it will be difficult to beat 2015,” he said.
CIC’s purchase of the Investa Portfolio for $2.45 billion was the biggest deal that boosted the figure last year, he added.
According to Ong, Chinese investment activity will be concentrated on development sites and office investments, focusing on prime product in the Sydney and Melbourne markets.
He predicted some growth in 2016, but potentially not levels as high as Australia has seen in the last few years.
“I expect demand will be strong for the next three to five years, but what might affect the transaction volume will be supply – the lack of available prime stock available in the best locations,” said Ong.