Chinese and Australian real estate

Posted: May 8, 2015 in Uncategorized

On Thursday I got my hand on a research from Credit Suisse that shows the scale of the fact – probably still underestimated as not everything is ‘above water”.

Finally some light on this issue.

The following investments, in 80% of cases, are directed to Melbourne and Sydney (40-60, but starting to tilt to Melbourne).

In 2013-14 USD8.7 billion were invested in Australian real estate (+60% year on year since the year before), which is the 15% of the Australian housing supply..\

In the next 6 year (to 2020, as the research is now public and outdated) – the forecast tell us that another USD60 billion will be invested (the same figure in the 6 years pre 2014 were USD28 billion).

The purchases have been done 2% by new immigrants and 5% as investment.

There were 1.2 million Chinese in 2014 with a net worth of over USD $1,000,000 and, bar a Chinese meltdown, there will be 2.6 million Chinese with such a net worth in 2020.

If you add some issues unique to China:

The Chinese  corruption squeeze stimulate the idea that is better to have some assets out of reach of the Chinese Government.

A general insecurity towards the State that can decide anything in regarding to your property (and else)

A real estate property in China cannot be purchased as in Australia. When you buy in China it is for a 99 year lease(!)

The conclusion is that this trend – aside a black swan event – is unstoppable. And for sure a small hike in foreign ownership taxes will not stop it.

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