According to a report in Fairfax media outlets over the weekend, eight out of the 10 most expensive residential sales in Sydney this year were funded by overseas money, helping Sydney join the ranks of the traditional global real estate powerhouses.
“This is the first time Australia has seen this level of foreign investment,” Tony Crabb, national head of research at real estate franchise Savills, told Fairfax.
“Global cities like London and New York have been seeing this for a long time, but now we find the next league of high-net-worth individuals hitting the international world market are the extremely wealthy Chinese, and they are looking at cities like London, but also Vancouver, and Melbourne and Sydney,” Crabb told Fairfax.
According to the report, just three out of the 10 most expensive residential sales in 2014 were funded by offshore money.
The current level of demand for prestige real estate in Sydney helped the city set a new residential sale record this year, with James Packer selling the La Mer mansion in Vaucluse for $70 million.
Much of the foreign demand for prestige real estate has come from China, and there are predictions that it could increase further in 2016, as the Asian powerhouse eases restrictions on how much capital its citizens can take out of the country.
“Our forecast is for continued growth in the premium Chinese buyer market. New data from China shows that the country now has more billionaires than any other, even the United States. Its ranks of multi-millionaires is also growing rapidly,” Simon Henry, co-CEO of Juwai.com, told Your Investment Property Magazine last week.
“China is also considering the complete removal of all limits on capital exports by 2020. The Bank of England expects that to result in a 600% increase in Chinese ownership of overseas assets, including real estate,” Henry said.