Overseas property interest in Australia stays strong

SBS World News Radio: The Foreign Investment Review Board says Chinese property buyers spent more than $24 billion on Australian real estate in the 2014-15 financial year.

Overseas property interest in Australia stays strongOverseas property interest in Australia stays strong

Overseas property interest in Australia stays strong

Crown is one of Australia's biggest residential developers.

And chief executive Iwan Sunito says he is seeing no waning interest from overseas.

"The foreign demand is still constant, and we're seeing that into the new job that we're launching, the number of foreign buyers is still constantly the same."

Mr Sunito says 30 per cent of the company's sales are to foreign buyers.

"And that is kind of a policy that is adopted by Crown Group, but, also, the banks are actually insisting that there are certain percentages and numbers that have to be met to meet the funding requirement. In terms of international buyers, there's no doubt that the biggest numbers would have to be from China. Second for us is Indonesia. Thirdly is from Singapore for us."

Chinese investors are looking to diversify their own portfolios, with international property increasingly attractive because their own real-estate market is becoming too expensive.

The average price for a new home in China's 70 major cities has risen more than 9 per cent from a year ago, but, in some places like Shenzhen, prices have risen 37 per cent.

Charles Pittar is chief executive of the Chinese international property investment website Juwai.com, which attracts 2 million unique visitors every month.

"Forty per cent of those are looking at the US, so that is our biggest market. Australia's not far behind, around 35 per cent. But, look, Canada, the UK, certain parts of Europe, Dubai, there are a number of countries in between as well. But the three biggest markets are those."

Mr Pittar says interest is still rising.

"We've seen a significant increase. Certainly, the trend over the last few years has been increasing, but, even in the last 12 months, we've seen an increase of around 15 per cent of inquiries into Australia."

Melbourne is searched the most, followed by Sydney, Brisbane, Adelaide and then Queensland's Gold Coast.

Charles Pittar says the buyers are not always looking for the premium end of the market.

"Most popular is between half a million dollars US and 1.5 million US. That's 70 per cent of our audience, which I think is interesting because there is a perception, I think, in Australia that it is Chinese coming into Australia buying super, super expensive properties. It's not really the case."

He says the majority of those homes are for their children.

"Roughly 50 per cent of inquiries we get globally are connected with education. So it's a long-term trend. And this is something that, culturally, the Chinese do want their kids educated internationally. Yes, they want them to come back to China with that Western education and the Western connections, but it's a very long-term trend."

Mr Pittar says buyers do not always rely on financing to purchase those homes.

"Seventy per cent of the audience we deal with are paying in cash. So they've saved, over at least one generation, a significant amount of cash, and so, realistically, they're not looking for finance."

It is a sentiment also noticed by developers like Crown's Iwan Sunito.

"Across the last 20 years, I mean, our buyers have always had access to local banks. Now the fact is that local banks are not particularly there anymore. The local banks are only the book value of local banks that they lend to offshore buyers is only 1 to 3 per cent, so it's actually quite tiny. The foreign buyers have always had access to international banks, global banks and, also, their own local banks, so, typically, they've got access to Chinese banks, Singaporean banks, Malaysian banks, Indonesian banks and, also, the big groups like the Citibank and the like. The second one is actually cash buyers. Now, typically, we had about 15 to 20 per cent do pay cash, and the rest could actually pay cash if they need to."

For now, Bloomberg China chief economist Tom Orlik says, China's economy looks able to sustain those purchases.

"We had a lot of stimulus from the end of 2015 into early 2016. That's now passing through to the economy. Based on our estimates, growth in the start of the third quarter is comfortably inside the government's 6.5 to 7 per cent range. Of course, there are challenges to address -- credit risks, property overbuilding."

That leaves experts and developers, like Mr Sunito, to convince Australians of the benefits of foreign investment.

"It's important for us to keep sending a message to the foreign buyers, because we spend a lot of money to bring them here, 'Come on, study here, come and invest here, come and invest in a house.' And then, the next step is, 'Invest in a business,' right? It is important for us to send a message of more red carpet rather than the red tape."

 

 


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By Ricardo Goncalves

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Overseas property interest in Australia stays strong | SBS News