Cashed up Chinese investors fuelling Aussie property market

Azure Waterfront Village, Rhodes

Azure Waterfront Village, Rhodes in Sydney by Pacific Asian Developments

There is anecdotal evidence Asian home buyers and property investors, especially those from China are firing up the Australian property market. When wealthy Chinese go abroad for their holidays, their shopping lists extends beyond high-end, branded luxury goods to real estate. Australian cities are now at the top of their shopping lists for property investment.

“I would estimate that around $200 million of my sales come from buyers from China each year,” says Harry Triguboff, managing director of Australia’s largest apartment developer. Triguboff, whose company Meriton has built thousands of apartments across Sydney, especially in central Sydney, says the portion of Chinese buyers in some locations could be as high as 60 percent.

“Last year was my peak year. We sold between 230 and 250 apartments in Sydney to Chinese investors,” says Ray Chan, managing director of Henson Properties in Sydney’s Chinatown.

David Morell, a buyer’s agent in Melbourne, is sure that money from China was responsible for his client being outbid for a house in Camberwell in Melbourne’s east two weekends ago. “She was about 19 years old, she had no English and she didn’t really know how to bid – she just kept her hand up. She was buying on a student visa,” he says of the young woman who pipped him with a bid of $1.82 million for the three-bedroom house that, in his words, had been given the “feng shui tickle”. Chinese investors now prominent at auctions in Melbourne’s eastern suburbs have “single-handedly fuelled Melbourne’s growth, he says. “Asia is looking at Australia as the new Switzerland”.

In Sydney, too, there are anecdotes of auctions dominated by Chinese bidders, of well-to-do Chinese families arriving at real estate agents, their teenaged children acting as interpreter and snapping up multi-million dollar units close to the city.

Unit 1138 - 2 Marquet street, Rhodes 2

2 bedroom apartment at 1138/2 Marquet street Rhodes, for sale at $729,000 through Tracy Yap Realty

Chinese government restrictions phased in from last year to dampen the red-hot domestic Chinese market had “sent a wall of capital offshore”, according to Brian White, Chairman of Ray White. At the top end of the Sydney market, a Chinese buyer was one of three parties vying for a $30 million home, Mr White said. The others are an American and an Australian.

Local Asian buyers had a huge impact on the first-home buyer market last year, but had flowed through into the upgrade and prestige markets, Mr White said. “It is a new market force and one which we had underestimated the strength of,” he said. Sydney prestige homes, particularly over $4 million, had increased in price by 10 per cent, with offshore buyers helping to fuel the growth.

The growing trend of mostly Asian parents buying apartments, many worth more than $2 million, for their children to live in while studying here was also fuelling capital-city residential markets.

New luxury apartments in the Sydney suburb of Rhodes which are being developed by Mirvac, Meriton and Billbergia are being snapped up mainly by overseas Chinese buyers. Two bedroom apartments in the new Azure Waterfront Village on Shoreline Avenue in Rhodes are now selling off-the plan, some of which are well over the $710,000 price range.

Ewan Morton, managing director of Sydney-based Morton and Morton, said 16 percent of the real estate agency’s sales last year were to Chinese buyers, with $21 million in property changing hands. This compared with 5 percent in 2008. “I don’t see it abating,” he said. “The mainland Chinese are looking for purpose-built new apartments with water views…their kids are here studying.”

Colliers International’s NSW director of project marketing, Murray Wood, said that at the Stamford Residences, a 30-level tower at The Rocks in Sydney, one buyer recently bought an apartment for $2 million for their child to live in while studying here. About 6 of 122 apartments had been sold to buyers from mainland China.

Agents say the student market has also boomed in Melbourne. Colliers International’s managing director of project marketing for Victoria, Tim Storey, said about half of the 100,000 people living in central Melbourne were overseas students.

Global real estate adviser DTZ’s Queensland project marketing director, Paul Barratt, said while less than 1 percent of Queensland’s residential property was sold to foreign buyers, changes in late 2008 by the Foreign Investment Review Board allowing 100 percent of a new residential project to be sold to offshore buyers, meant this could change.

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