Australia saw a dramatic decrease in potential foreign investment during the 2016-17 fiscal year. Government data showed that residential real estate approvals fell to 13,198 in that period from 40,149 in 2015-16, a decline of 67%. The value of these approvals also dropped significantly, down to $25.2bn from $47.2bn.
According to the Foreign Investment Review Board (FIRB), China’s greater scrutiny on outbound investment, and the introduction of state based taxes on foreign investors, contributed to the drop.
However, there have been signs over recent months that foreign investment is picking up. Figures from CommSec – CBA’s online stockbroking firm – show that Chinese property investment rose by an annualised 10.2% in the seven months to July, up from June’s comparable 9.7%.
Further data showed that Chinese urban investment increased 5.5% year-on-year in the seven months to July, slightly lower than the previous month’s comparable 6%.
Juwai.com CEO and director Carrie Law, who writes about the Chinese property buying market in the next issue of Australian Broker, said this year could mark the beginning of a new phase in Chinese investment. “Rather than threatening further capital controls, the Beijing government is hinting it may unwind them. Chinese buyers are beginning to anticipate a time, perhaps this year, when investing overseas becomes easier once again.”
Law also cited data from FT Confidential Research, which report that a majority of Chinese households intend to increase their offshore investments in the coming two years.
“A key factors when working with buyers from China is to have an understanding of the special requirements that lending institutions have when dealing with offshore income. A second factor is to have relationships with non-bank lenders who can provide financing to foreign buyers of Australian property,” she continued.
Posted by: Dominik Weber