Scaremongering about foreign, particularly Asian, property investors has been rife in recent times – culminating in the announcement of a government inquiry into foreign investment.
But, according to a new report, the next wave of Asian investment is actually set to target non-traditional property sectors and areas – rather than residential property.
The Colliers International report found that Asian property investors will continue to pour increasing amounts of money into certain international markets, including Australia.
It said that, besides increasing global liquidity, the rise in the volume of outbound investments was being driven by a number of strong ‘pull’ and ‘push’ factors.
John Marasco, from Colliers, said that more Chinese investors were ready to jump onto the bandwagon because they now felt more comfortable investing in overseas real estate markets.
“Chinese buyers alone are currently spending around $5.9 billion a year on Australian property,” he said.
“The strong performance of Australia’s property markets suggests this demand will continue to grow across a range of assets.”
However, it was commercial real estate that was growing in popularity with Asian investors. In fact, offices have become their first choice of investment sector.
Between 2001 and 2013, their percentage weighting increased from 45% to 60%.
This trend was expected to continue as Asian investors looked for higher return opportunities, Marasco said.
Meanwhile, REINSW President Malcolm Gunning said that the idea foreign investors played a “negative role” in the Australian residential property market was misguided.
A convoluted planning system and a tax system that placed an unfair burden on property were the reasons there was a lack of affordable housing in NSW, he said.
“Now is not the time to discourage foreign investment… Foreign investors help our economy. They support the creation of jobs in the construction industry and other areas like retail.”
The benefits from a stronger property market were universal, so Australia needed foreign investors, he added.
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