Chinese authorities investing directly in Australian real estate

Discussion in 'China property' started by Nicholas Wallwork, Nov 29, 2015.

  1. Nicholas Wallwork

    Nicholas Wallwork Editor-in-Chief Staff Member Premium Member

    The Chinese authorities have always been fairly secretive with regards to their business but the emergence of an array of “private companies” effectively owned by the Chinese government has led to some very interesting headlines in Australia. Official figures show that the “People’s Republic of China” acquired around $260 million worth of Australian commercial real estate in 2014 alone. While this is just a fraction of the $4.37 billion invested in Australia by Chinese investors, it is interesting to see the government investing at a time when the Chinese real estate market is under extreme pressure.

    What asset types are being acquired?

    It seems that the Chinese government has gone for an array of high profile expensive commercial real estate opportunities in Australia. Many of these include prime properties across Australia’s major cities at a time when the Australian government seems to be trying to cool overseas investment in the Australian property market. It will be interesting to see whether this trend continues in light of the troubles across China where the government has been acquiring Chinese property to prop up the market in general.

    Will this trend change with troubles in China?

    The reality is that the Chinese real estate market has been under pressure for some time now and against this background the authorities have increased their investment in real estate, especially in Australia. Indeed the two governments have on numerous occasions held discussions about how they can work more closely together especially bearing in mind Chinese investment in the Australian natural resources industry – such as mining.

    Many believe that Chinese investors are positioning themselves for the next stage in development of the Australian natural resources industry. This will include significant investment in infrastructure projects because as has been well documented some of the more prosperous mines are in some of the more far-flung areas of the country.

    Is this a new era for Chinese investors?

    The last 10 years have seen China open up to the wider world to a degree not seen for many years. Indeed while many would have assumed the Chinese government would have “jumped into bed” with US counterparts it seems that Australia is prominent on the investment radar. Not only have we seen a significant increase in indirect Chinese government investment in Australia but there has been an enormous increase in private investor transactions.

    When you bear in mind that there has been a cloud over the Chinese real estate market for some time now it does make sense to spread your wings and diversify your portfolio. Many experts also believe that the historic degree of control enjoyed by the Chinese authorities has been significantly reduced of late and markets are becoming more transparent.

    Relatively high real estate stamp duty payments have assisted many authorities across Australia and this is likely to continue for some time to come. Surely the relationship between China and Australia can only blossom in the foreseeable future?

    Conclusion

    It has been well documented that Chinese private investors have been investing significant amounts of money in the Australian real estate market but the extent of government investment has often been shrouded in mystery. However the revelation that the Chinese authorities acquired $260 million worth of Australian commercial real estate in 2014 alone has made many people sit up and listen. The relationship between Australia and China continues to blossom and many investment experts see further crossover investment opportunities in the future.

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  2. nmb

    nmb Well-Known Member

    Are you really surprised to learn that the Chinese authorities are investing directly in Australian in real estate? Let's face it, the Chinese government is one of the most secretive in the world and even though some Chinese markets are now partially open to foreign investors they still rule the region with an iron fist.
     
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