Chinese investment into Australian real estate surges

Chinese investment in Australian commercial real estate almost quadrupled in 2014 as foreign investment from the country continued to shift from mining to new sectors, a report has found.

Direct investment in commercial real estate skyrocketed last year to $4.37 billion — almost half of all Chinese investment into Australia according to the latest 'Demystifying Chinese Investment in Australia' report by KPMG Australia and the University of Sydney China Studies Centre.

The surge in investment in commercial real estate represented 46 per cent of total investment, up from 14 percent in 2013 while the proportion of investment in mining slipped to 11 per cent from 24 per cent.

But the rise in commercial real estate, infrastructure and tourism and leisure has failed to pick up the slack from the drop in mining investment with overall investment from the world’s second largest economy declining for the second year in a row. 

The new figures represent a shift towards a ‘new normal’ in Chinese foreign investment in Australia which will see a further $US90bn poured into the country in the next decade according to the authors of the report.

The huge pickup in interest in real estate has been led by a weakening Chinese market and government policy which encouraged overseas investment by firms.

“In turn, this has led to increasing investment levels in gateway markets globally – particularly in Australia,” said Matt Whitby, head of research and consulting at Knight Frank.

The total value of Chinese outward real estate investment had skyrocketed from $US600 million in 2009 to $US16.9bn in 2014, according to Knight Frank.

Chinese investors are now likely to switch their focus to other key cities in Australia as well as "suburban locations in metropolitan Sydney, Brisbane and Melbourne – not just within the CBD and fringe markets,” said Mr Whitby.

In 2014 China became a global net foreign investor for the first time, with total outbound direct investment volume rising by around 11 per cent to $US120bn.

Australia maintained its standing as the second largest recipient country of aggregated global Chinese direct investment, behind the United States in first position.

via Business Spectator