On a Buying Spree: Why China's Richest Property Mogul Targets Australia
Sentinel Property Group Pty LtdLevel 4, 307 Queen Street Brisbane QLD 4001
Phone: 07 3733 1660
More and more seasoned real estate investors in China are paying close attention to the Australian market. The latest is the Wanda Group, which made an announcement that it will invest about $1 billion in Sydney’s central business district. The company shares that the investment will include more than $300 million for an office building that is previously owned by Blackstone, a private equity group.
According to a statement published by the Wanda Group, it will develop a high-rise tower that aims to be one of the city’s main landmarks. The commercial real estate developer’s investment marks the second by the group in Australia. Apart from Sydney, Chinese investors are also quite active in Melbourne and Brisbane.
Booming investment in commercial properties prompted a discussion, as to why foreign investors prefer Australian market.
No Minimal Return
In cities with huge population, such as Beijing and Shanghai, the cost of property is high yet the returns are low. Most areas in Shanghai are costlier than in Sydney, with retail property returning for about 3 percent yield. This is why Chinese investors find the Australian market attractive, as the country offers a long-term investment.
Portfolio Diversification
The aim of Chinese real estate developers, both private-sector firms and state-owned, is to diversify their investment portfolio in Australia. In addition, they are seeking growth prospects beyond the property market in their own country.
Control to Property
In China, properties purchased belong to the State. That means they have a lease term of around 70 years, which investors can get through a land grant between the property owner and government-run land administration department. In Australia, however, investors have the necessary control once the purchase is made. As long as the buyers have the financial capacity, they can sit on them for a lifetime.
China remains the top investor, buying more than $60 billion in real estate in Australia since 2007. Recent analysis from industry watchers reveals that the country’s commercial property market continues to attract more foreign buyers. Australian housing market, on the other hand, is also unlikely to slow down in 2015 as Chinese buyers continue to snap up property.
Resources:
http://www.sentinelpg.com.au/
http://www.theaustralian.com.au/business/property/chinese-investment-in-australian-property-set-to-grow-in-2015/story-fn9656lz-1227185874360?nk=44cf2fcd7281df14abccbaeb61162827
http://www.austrade.gov.au/invest/investor-updates/2014/china-s-wanda-group-to-develop-first-five-star-beachfront-hotel-in-surfers-paradise
