Chinese look to US real estate after bank loan impositions in Australia
An outcry in Australia against property buying by Chinese investors and tightening of lending by banks has caused them to shift focus to the US residential market, says a recent media report.
Purchases of residential properties in the US by Chinese investors rose to US$28.6 billion last year from US$11.2 billion in 2010, said a report in The Australian based on figures from the study by the Asia Society and Rosen Consulting Group.
The report looked at how Chinese buying in Sydney and Melbourne had sparked a “public outcry” because of concerns about “speculative real estate investment ... that is contributing to bubble like conditions of inflated home prices and pricing out many local residents”.
The shift to the US has also been fuelled by Australian banks tightening lending criteria to Chinese.
The report said China’s investment in overseas property would slow.
“We believe China’s economic turbulence will create a short-term speed bump for real estate investment overseas,” it stated.
The study also predicted a period of increased capital controls, either formally through policy announcements or informally through administrative processing — until the Chinese currency was realigned.
It said those concerns would not spill over into the local real estate market, with key executives arguing that any restrictions would likely lead to a regulation of capital inflows into Australia, and not dry up.
Cushman and Wakefield's head of capital markets for Australia and New Zealand, James Quigley, however had a contrarian view, saying a new wave of Chinese investors would be undeterred by such measures.
Quigley cited moves by large Chinese institutions, including insurance and asset management companies, as well as high-profile developers who dominated initial investing. Their activities would be supported by lesser known, small to mid-cap companies and developers, private equity funds and wealthy individuals, he said
He also noted the number of investment approvals granted over the past three years to Chinese groups had jumped by 416 percent.
“This is a good indication that the Australian government is quite supportive of Chinese capital entering and making investments in Australia,” he said.