Rich Chinese property investors are eyeing up Australia, with over 700,000 expected to migrate overseas in the next 2 years.
The latest ranking from Juwai IQI shows that Australia ranks number one as the top overseas destination for Chinese property hunters.
Australia comes ahead of all other global markets, including Canada, the UK, and the US, which came in second, third, and fourth place respectively, based on the number of inquiries that rich Chinese investors have made on the investment platform during the first 6 months of 2023.
| Rank | Country |
|---|---|
| 1 | Australia |
| 2 | Canada |
| 3 | United Kingdom |
| 4 | United States |
| 5 | Thailand |
| 6 | Malaysia |
| 7 | Japan |
| 8 | United Arab Emirates |
| 9 | Vietnam |
| 10 | Singapore |
In fifth place were Thailand, Malaysia, and Japan.
The United Arab Emirates, which ranked 13th in 2021, shot up to eighth place while Germany fell out of the top 10.
Vietnam and Singapore accounted for ranks 9 and 10.
Kashif Ansari, group chief executive officer and co-founder of Juwai IQI explained that many real estate transactions are dependent on Chinese buyers being able to go abroad.
At the moment, Chinese travel is still at low levels, with outbound travel still yet to rebound to pre-pandemic levels thanks to limited airline capacity and high travel costs.
But as international travel resumes he expects that Chinese interest in overseas property markets will only grow further.
Juwai IQI’s report expects that a sustained exodus over the next few years will continue to drive Chinese property investments abroad with around 712,000 people from the country anticipated to migrate to the US, Canada, and Australia between now and 2025.
The country's hard COVID-19 lockdown rules and restrictions, combined with President Xi Jinping’s push for “common prosperity” means China’s wealthy have been flocking to more welcoming places such as Singapore or setting up a backup plan.
And the report expects capital flight from the mainland could reach US$150 billion ($221 billion) this year, as more Chinese people move their money abroad.
Interestingly, Western countries have long been a mecca for Chinese immigrants, but South-East Asia has emerged as a hotspot for high-net-worth Chinese individuals, with residents attracted by “golden visa” programs that fast-track investors and professionals to residency.
Chinese citizens are the biggest source of demand for golden visa programs across the globe, which can allow people to stay as long as 20 years.
In 2021, Chinese accounted for 46% of approved applicants in two of the most popular programs: Greece and Australia, and 31% of approvals for Portugal.
While foreign investors largely underpinned the presales for the many apartment towers built in the past decade, they have been largely shut out of Australia’s property market over the past few years as Australia’s physical border closure kept international arrivals at a bare minimum.
More than that last year our federal government doubled the fees foreign investors must pay to buy a property here
We have to remember that developers must pre-sell a large percentage of their properties in proposed apartment towers in order to get property development finance.
At the moment there are very few large apartment buildings coming out of the ground because they are not financially viable amid soaring construction costs and construction completion uncertainty.
Taking away a stream of buyers when the market is tight is only going to worsen the current rental crisis.
Without finance, these buildings won’t be constructed, and without an uptick in dwelling supply, the number of rental properties will only tighten further, forcing rents to continue skyrocketing.
Note: Don’t forget that foreign buyers can only buy new or off-the-plan residential properties.
In general, they can’t buy established residential properties meaning they are not competing with Aussie home buyers or most investors.
But with the lifting of China’s travel restrictions and the return of foreign-enrolled students to Australian campuses, I can only see China’s demand for new and off-the-plan sectors continue to remain strong.
About Brett Warren Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.
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14 comments LEAVE A COMMENT John 2023-09-30 12:10:08Great news for investors and home owners - terrible for our future generations of Australians who will inevitably be renting for their entire life and living off a pension in retirement.
Tom 2023-08-07 07:59:56Hello Michael, "Foreign buyers can only buy new or off-the-plan residential properties." IMHO this statement misses the point completely. I believe what happens is a Chinese student (or other country) studies at an Australian University (full fe . Read full version
Paul 2023-08-04 21:37:46Allowing Australians generally do not like high-rise apartments, having more built, irrespective of the buyers or target audience, is most likely not in the long term best interests of Australians. Why Australia allows dual citizenship (you're eit . Read full version
Would you like to share your thoughts? John September 30, 2023Great news for investors and home owners – terrible for our future generations of Australians who will inevitably be renting for their entire life and living off a pension in retirement.
Michael Yardney September 30, 2023 The latest stats show even more foreign interest John Tom August 7, 2023Hello Michael, “Foreign buyers can only buy new or off-the-plan residential properties.”
IMHO this statement misses the point completely.
I believe what happens is a Chinese student (or other country) studies at an Australian University (full fee).
Chinese student then gets Permanent Resident Visa and 2 years after that Australian Citizenship.
Then the Chinese student suddenly buys $5million worth of real estate at the age of 25 years old.
Supposedly this is not a “foreign buyer” buying up Australia’s real estate.
We all know the money is Chinese money from the student’s family.
I would like to know how many Australian “citizens” who acquired their citizenship after turning 18, are buying real estate.
If you could somehow get that information I think you would make national headlines in all the newspapers.
Allowing Australians generally do not like high-rise apartments, having more built, irrespective of the buyers or target audience, is most likely not in the long term best interests of Australians. Why Australia allows dual citizenship (you’re either Australian, or you aren’t) and things like foreign property ownership (many Asian countries do not allow more than 49% foreign ownership of property) seem to suggest lots of vested interests as opposed to doing what is best for Australia. The planet is only so big – even at “only 3%” inflation, eventually there isn’t going to be enough resources to go around, but our politicians seem to feel the need to bring in more people as opposed to fixing what is here already.
Michael Yardney August 4, 2023 Thanks for your thoughts Paul Paul August 4, 2023Trent,
Would you please expand upon your comment: “Don’t forget that foreign buyers can only buy new or off-the-plan residential properties”. Why is that the case, who is responsible for that restriction, is it actually enforced, and if so, how?
Thanks,
Foreign investors require Foreign Investment Review Board (FIRB) approval in order to purchase any property in Australia. The FIRB is a government body that manages foreign investments and property purchases.
