Chinese cooling on Australia property sees cash heading to Thailand: UBS

Chinese cooling on Australia property sees cash heading to Thailand: UBS
Chinese cooling on Australia property sees cash heading to Thailand: UBS

Chinese property investors are choosing Bangkok over Sydney and London, according to UBS.

Chinese buyers of property abroad tend to fade or pick up depending on key factors, UBS head of global real estate Kim Wright said.

“What we have found is that Chinese buying of property abroad tends to be very price and currency-aware,” Wright told The Australian.

“Their focus on specific markets will fade or pick up, depending on their view of currency. Over the last two years we have seen Asian buying of Australian property, specifically Sydney, Melbourne and Brisbane, that’s been very strong. It looks like that has started to fade over the past six months.

“I think it’s the combination of factors. Prices have been very strong in Australia so there is now a discussion that the cycle has started to peak and there’s the tax changes that have come through along with the tax controls.”

Wright suggested the decline in demand for property in Australia among Chinese buyers was similar to a loss of interest in London property in late 2015 when buyers felt the market had peaked, while tax changes and tighter capital controls further put them off.

Wright told the recent UBS Greater China conference in Shanghai that their research suggested tighter capital controls were just one factor.

Half those said the controls had encouraged them to bring forward purchases while the other half said it would slow their buying.

The UBS research also found that two thirds of property purchases were cash settled.
Wright suggested that Chinese property investors were now looking to Bangkok, Thailand, as a new market.

"I am not sure if that's a function of the One Belt One Road initiative and people are seeing the infrastructure spend and the co-operation, but also the price point is pretty attractive."

The Shanghai conference addressed efforts by Chinese authorities to reduce private sector debt levels and put the economy on a sounder footing without severely impacting growth, or triggering a financial crisis.

"A Minksy moment will not come in China. The debt problem is not going to result in a sudden collapse," said UBS head of Asian economic research Wang Tao.

Dr Wang said data that showed that China's foreign exchange reserves had actually increased was a "pleasant surprise" particularly in the context of fears last year that sustained outflows would deplete reserves and weigh on the currency

She is forecasting slower economic growth of 6.4 per cent in 2018 and 6.3 per cent in 2019 compared with the 6.8 per cent achieved in 2017.


Chinese Investment Ubs

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