Chinese property investments in Aus up 5,000%

Chinese commercial property investments in Australia grew more than 5,000% between 2007 and 2013.

This is according to Colliers International, which reports that the amount of Chinese direct investment in commercial property in 2013 was $871m, compares to a, by comparison, paltry $17m in 2007.

Colliers national director of research Nerida Conisbee said Chinese investment activity is expected to grow in the next decade.

“Changes to regulations surrounding investment into property by Chinese investors is expected to lead to significant amounts of capital entering Australia."

Substantial investment in Australian property is also coming from South Korea, Consibee said, as the nation’s large pension system looks to actively invest in property worldwide.

“It is likely that pension funds will continue to increase their investment in Australian property, both local superannuation funds, and offshore groups. Malaysian investors are also expected to become more active, particularly from the huge amounts of personal wealth in that country,” said Conisbee.

In 2012, offshore investors accounted for more than half of all direct purchases by volume, said Consibee, a percentage that would be even higher if capital partnering and investment into listed and unlisted funds was also included.

“It is therefore interesting that in 2013, this began to change… Domestic investors re-entered the market at a rapid rate. At November this year, they have accounted for more than 70% of total direct sales.

“The local investors entering the market have been primarily major property institutions, with their unlisted funds being particularly active.

“By the end of October, these unlisted funds accounted for $4.3bn of total transactions. This is higher than what was experienced in 2007 prior to the global economic downturn, and more than double the 2012 level.”

John Kenny, Colliers International CEO, Australia and New Zealand, said strong investment conditions have been the defining feature of the Australian property market in 2013.

“Australian property continues to attract increasing levels of capital, both from within Australia and offshore,” he said. “Our market has been considered a safe haven with low interest rates and attractive yields continuing to attract international investors and providing solid investment conditions for local investors.”

Significant purchases by Chinese investors in 2013 have included:
  • Centennial Plaza (260, 280 and 300 Elizabeth Street, Sydney): Sold on behalf of Investa Property Group to Invesco (on behalf of Chinese Investment Corporation), for $305million. The largest direct property transaction in the Sydney CBD this year.
  • 229-234 Franklin Street, Melbourne: Sold for $17million to a private Chinese investor.

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