Money Chinese property investors still call Australia home

08:56  14 november  2017
08:56  14 november  2017 Source:   Sydney Morning Herald

Chinese property investors still call Australia home

  Chinese property investors still call Australia home The amount of cash flowing out of China into property has halved within a year but Australia is still the preferred destination for Chinese investors able to get their money out. In its latest report, real estate firm Cushman & Wakefield and Real Capital Analytics (RCA) says mainland China's third quarter total outbound real estate investment plunged 51 per cent year-on-year to US$2.5 billion, the lowest total in 14 quarters, or since the last quarter of 2013.The steep fall in investment is the result of tougher Chinese government regulations.

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You might think Australia 's houses are ridiculously overpriced, but that's not how China 's millionaires see it.

Dalian Wanda hotel and apartment development at Circular Quay is being done at a time when Chinese outbound investment is under pressure.© Supplied Dalian Wanda hotel and apartment development at Circular Quay is being done at a time when Chinese outbound investment is under pressure.

The amount of cash flowing out of China into property has halved within a year but Australia is still the preferred destination for Chinese investors able to get their money out.

In its latest report, real estate firm Cushman & Wakefield and Real Capital Analytics (RCA) says mainland China's third quarter total outbound real estate investment plunged 51 per cent year-on-year to US$2.5 billion, the lowest total in 14 quarters, or since the last quarter of 2013.

Home auctions rise, but well down on 2016

  Home auctions rise, but well down on 2016 Auction volumes increased across Australia's combined capital cities over the past week, as did resulting home sales, but at a much softer rate than last year.Property data group Corelogic's weekly property survey shows that the national auction clearance rate rose to 66.5 per cent, up from the adjusted 61.5 per cent in the prior week when the final figure was the lowest since early 2016, but well below the same time last year.

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Six months on from a bank clampdown on foreign lending, tens of thousands of Chinese property investors are struggling to pay for their off-the-plan apartment purchases.

The steep fall in investment is the result of tougher Chinese government regulations.

Dominic Brown, head of research, Australia and New Zealand, at Cushman & Wakefield, said Australia jumped into first place by overseas destination with US$783 million in deals coming in for the September quarter.

Dr Brown said the Chinese government in August ramped up efforts to control overseas real estate investment, issuing Circular 74, "slap bang in the midst of the third quarter"

This was the second regulation announced in nine months that sought to restrict outbound investment capital flows, branding overseas real estate investment as a "limited" category though not "prohibited".

"Chinese investors have deployed a cumulative US$1.2 billion in real estate Down Under thus far in 2017," Dr Brown said. The United Kingdon and Hong Kong were the second and third most popular countries.

Sydneysiders have 'unrealistic expectations' amid a slowdown in the property market

  Sydneysiders have 'unrealistic expectations' amid a slowdown in the property market Sydney real estate agents say there's been a detectable shift in the local market Sellers are being forced to change their expectations Market is expected to continue cooling into the end of the yearAustralia's property market is cooling, and the slowdown is being led by the previously red-hot Sydney market.

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OFF-the-plan properties in Australia are set to see a whopping 43 per cent plummet in demand from offshore Chinese investors and agents over the next Gone are the days where hundreds of off-the-plan homes would sell out in hours. But China will still remain Australia ’s largest market, he said, as

While there have been large commercial property deals such as 161 Miller Street, North Sydney, which was bought by the Maville Group for $103 million, agents are anticipating a decline in activity in the coming year.

One of the biggest projects is in Sydney by the Dalian Wanda group which is developing the $1 billion mixed use hotel and apartment towers at Circular Quay.

Office investment only accounted for 28 per cent of Chinese outbound real estate investment volume, down a substantial 83 per cent quarter-on-quarter. Chinese investors did not acquire any overseas trophy offices in the third quarter  as the sector's investment volume was the lowest total since the second quarter of 2014.

Unsurprisingly, the majority of overseas investment was directed at the development sector, although even the off-the-plan sales for apartments is starting to wane.

According to the research, in line with previous forecasts, overseas development sites have quickly emerged as the top asset category for Chinese investors.

Is this the cheapest way to invest in the housing market?

  Is this the cheapest way to invest in the housing market? The housing market has claimed its first share market victim in real estate agents such as Mcgrath Ltd (ASX:MEA), but investors looking to get into the ladder might want to consider Aveo Group (ASX:AOG) Australia’s housing market has been the subject of much debate over the years.It’s no secret that we have experienced a significant boom in the housing market and that has made some investors sceptical about the valuation of housing given the high levels of household debt.

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Australian banks cut off loans to Chinese property investors living overseas after being burned by The big four Australian banks have cut back on lending to foreign buyers 50,000 Chinese investors are worried about how they will pay off loans

While the share of investment into this asset category has surged from as low as 10 per cent to 58 per cent since 2016, there has been a pronounced swing in the opposite direction for overseas office investments, whose share over the same period fell back from as high as 71 per cent to 28 per cent.

McGrath pressure

This fall in project marketing has been felt across the real estate sector with listed agency McGrath saying it has impacted its sales performance.

McGrath recently issued an earnings downgrade of as much as 25 per cent, prompting speculation the board could look at privatising the business.

When asked at the earnings update if that was an option, McGrath chief executive Cameron Judson, declined to comment directly, but said "all options are under consideration". The founder, John McGrath, is the largest shareholder with 25 per cent of the register.

There has been suggestions that private equity firms were circling, but market analysts said it was "unlikely" given the company's main presence is in NSW.

A McGrath spokesperson said on Monday: "There has been no approach to date on privatisation with respect to McGrath."

"We would disclose any approach, as and when required in accordance with our continuous disclosure obligations," the spokesperson said.

"The company will not comment any further on speculation."

The McGrath annual general meeting is on Wednesday, November 22. At last year's meeting, Mr McGrath said shortly after the company floated, in December 2015, the property sector hit a wall with listings down considerably in Sydney.

The group has also lost a number of agents who sold "big ticket" homes although the franchised real estate agencies are performing well.

More developers to pull plug on CBD apartments, warns analyst .
Investment in residential property has peaked earlier than expected, the Reserve Bank says.Developer CEL Australia recently announced it would ditch long-running plans to build a 71-storey apartment tower, although it did not blame market factors.

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