Queensland new hot spot for Chinese property investors
We already know that the Australian property market attracts a high number of overseas investors, particularly Chinese investors, but according to the 2014-15 Foreign Ownership of Land Register, the number of Chinese investors has dramatically increased in Queensland and Queensland is now the new hot spot for Chinese property investors.
The Foreign Ownership of Land Register is Queensland’s method of recording investments in property from overseas buyers and is actually the only state in Australia to do this, so provides some insightful data.
With Sydney’s property market now definitely booming and auction clearance rates reducing, smart investors are turning their money towards Queensland, particularly Brisbane which is starting to see some growth. Not only is Queensland the new hot spot for Chinese property investors, but Australian investors are also snapping up new property here.
According to the Foreign Ownership of Land Register, the amount that China has invested in property has dramatically increased from $323 million in 2012-13 to $463 million in 2013-14, whilst it has leaped to a massive $872 million during the 2014-15 period. This equates to a 170 per cent increase in only two years.
In comparison, the total property investment from China alone is the same as the next five sources combined. According to the FIRB, the top five countries for real estate approvals in 2013-14 were China, USA, Singapore, Canada and Malaysia.
Within the top five are Singapore and Malaysia, both countries which also are home to a large Chinese population so there is a great amount of Chinese investment coming from other countries as well as China.
However, although Chinese investors are the biggest overseas investors, the Chinese do not hold the greatest amount of Australian land. These countries would be the UK, USA, Switzerland, Netherlands and Germany.
Typically, Chinese investors tend to invest in more urban areas compared to rural areas. This is mainly due to needing FIRB approval to buy large rural properties. Looking at land areas, the foreign ownership register shows that just 3.4 per cent of Queensland’s available land or 5.8 million hectares is tied up with foreign interests, which has increased from 3.2 per cent in 2013-14.
The UK owns 2.2 million hectares of that, whilst the US holds 548,000 hectares.
Within the Brisbane City Council area, Chinese investors have invested $382 million here in real estate, and another $372 million in the Gold Coast. Queensland offers the lifestyle that Chinese are seeking. As well as beautiful hot weather and sunny days, there is also long stretches of beach close by as well as vast shopping, food, entertainment and work opportunities within the city.
According to Analyst Michael Matusik, over half of the off the plan new apartments that are sold in the larger Brisbane and Gold Coast developments are being bought by Chinese investors. “I’ve not seen a degree of buying like that in 25 years in the industry,’’ he said.
Although Chinese investment brings much needed money into the country in order to build brand new developments and infrastructure which is highly required, there is the assumption that these investors are driving up the property prices throughout Australia and making it difficult for residents of Australia to get their foot on the property ladder.
Although some Chinese buyers are buying property here as an investment, others are buying property here in the hope of living in Australia one day in the future and are taking the opportunity to buy property now when prices are still affordable and interest rates are low. Australians should be thinking about their future too and make the decision to take action to invest in property too whilst property prices in Brisbane are still affordable.
Chinese developers in Australia are also taking advantage of this influx of Chinese investors and building developments that target this market or going into joint partnership with other developers, as typically Chinese buyers like to buy and live in a development that is home to other Chinese.
Even though there is a large presence of Chinese investors now in Queensland, probably due to Brisbane being in a rising market, Chinese buyers still prefer to buy property in both Sydney and Melbourne, both capital cities which are home to a large Chinese population.
With China having earlier issues with their stock market, we will have to wait and see whether this has a dramatic effect on Australian real estate now and in the future and how long Queensland will be the hot spot for Chinese property investors.
Published on 26th of October 2015 by Marty Stanowich