Chinese continue to dominate foreign investment in real estate: FIRB data

Chinese continue to dominate foreign investment in real estate: FIRB data
Chinese continue to dominate foreign investment in real estate: FIRB data

Chinese investors dominated the list of foreign investment approvals for the financial year 2015-2016, with much of it in residential real estate, data from the Foreign Investment Review Board annual report shows.

Of the total $47.3 billion pledged by Chinese investors in Australia, real estate accounted for more than $31.9 billion, FIRB data showed.

The total investment figure is similar to the previous year’s $46.6 billion in approvals.

The value of approved investment rose to around $248 billion, an increase of over $55 billion on 2014-15, driven predominantly by increased investment in the real estate sector, the FIRB noted.

Chinese investment commitments were far higher than the second-placed US at nearly $31 billion, of which $8.2 billion was into real estate. The FIRB data comes at a time when the government has announced measures to crack down on overseas property investors to cool the hot property market, mainly in the east coast.

Investment in development assets, such as new dwellings, vacant land and redevelopment of existing residential property that increases the housing stock was 85.4 per cent of all residential approvals, the FIRB said.

Most of these were in NSW and Victoria, or more specifically Sydney and Melbourne. 

Residential real estate also accounted for the maximum number of foreign approvals by sector. In 2015-16, there were 40,149 approvals compared with 36,841 in 2014-15, FIRB data showed. Residential attracted commitments of $72.4 billion in the last financial year.

Approvals to buy established dwellings have fallen 36 per cent from 2014-15, after the Treasury cracked down on illegally owned properties by foreigners and forced many to sell.

These statistics, as well as an analysis from Treasury last year, show that foreign investment approvals and investments in residential property do not push up the price of housing.

"While Melbourne received more foreign investment approvals than Sydney, price growth in Sydney was much stronger than in Melbourne," the FIRB report says.

"Every Chinese dollar invested landed in the pocket of an Australian somewhere. Chinese investment translates directly into jobs, tax revenue, economic growth and new housing construction. There's nothing about it that any reasonable person can object to. Frankly, China has been a godsend for Australia these past 10 years," Chinese property group Juwai.com’s chief executive Charles Pittar was cited as saying by the Australian Financial Review.

High value commercial property approvals increased by more than $10 billion.

For the third year in a row, China was the largest source of approved investments and while the US was second, it was the largest investor in non-real estate sectors.

There were foreign interests in 13.6 per cent of agricultural land by area as at June 30 last year. The two biggest investors in agricultural assets are the UK and the US.

Among agricultural assets, Federal Treasurer Scott Morrison approved the sale of the Kidman cattle empire for around $380 million to the syndicate of mining magnate Gina Rinehart and a Chinese company after refusing earlier attempts by a majority Chinese consortium.

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Firb Foreign Investment

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