News / Economy

Amid Graft Crackdown, Wealthy Chinese Invest in Australian Property

Land being developed for the new home construction is pictured at sunset in southern Sydney, Australia, Aug. 14, 2014. More wealthy Chinese are moving their money out of China to invest in Australia's property market.
Land being developed for the new home construction is pictured at sunset in southern Sydney, Australia, Aug. 14, 2014. More wealthy Chinese are moving their money out of China to invest in Australia's property market.
Reuters

More wealthy Chinese are moving their money out of China to invest in Australia's property market as a corruption crackdown in the world's second biggest economy gathers momentum, property consultants and lawyers said.

They said their clients had told them they had legitimate funds to invest, but were concerned about being caught up in an investigation, which in China often delves into the affairs of dozens of associates of the main target, and losing that wealth.

“What we see at the moment is that there are more Chinese who would likely send more money out of the country so they don't get caught up in this crackdown,” according to David Green-Morgan, global capital markets research director at real estate services firm Jones Lang LaSalle.

It's one of the most visible signs of the fear being caused in China by President Xi Jinping's 18-month-old drive against the pervasive graft that he says threatens the Communist Party's survival, a fear that is even causing some officials to take their own lives.

Beijing's campaign has particularly targeted so-called “naked officials”, the term for state employees whose spouses or children live overseas. Those officials are generally suspected by the party of using such connections to illegally move assets.

Ordinary Chinese citizens can legally transfer only $50,000 overseas each year, but vast sums leak out of China using a variety of loopholes, such as funneling money through the Chinese territory of Hong Kong.

“The restrictions in China are becoming more onerous,” said Green-Morgan. “That's triggered an increase in the amount of money that's looking to move out of China or probably is already outside of China and is looking to be spent.”

Safe haven

Australian property has long been a popular choice for Chinese money -- both legitimate and illegitimate - but the flow of investment appears to have accelerated of late.

According to Australia's foreign investment review board, China was the No.1 source of foreign capital investment into Australia's real estate in 2013. It received approvals to invest nearly $6 billion ($5.58 billion) into the sector, up 41 percent from a year ago.

“They are worried so they are looking for a safe place,” said a Sydney-based immigration lawyer, who is advising on setting up a new fund exclusively for Chinese investors and regularly travels to Beijing and Shanghai. “They don't want returns, not necessarily. They want a safe place,” he added.

China is expected to see an annual growth of 20 percent in outbound real estate investment in the next decade, up from $11.5 billion last year, property agent Savills has forecast.

That will help push Chinese demand in Australian property  by 15 percent over the next 12 months, said Andrew Taylor, co-CEO of Juwai.com, the largest real estate portal that targets Chinese buyers looking abroad.

Such strong interest is likely to boost Australia's apartment construction, which is set to hit record levels by 2017 and remain elevated through to 2020, Brokerage CLSA said in a report this month titled “The Magic Dragon.”

Favored destination

Wealthy Chinese have been pouring money for years into real estate in major cities in North America, Europe and Asia, including New York, London and Sydney.

Some of their favorite markets are becoming less attractive, though, for Chinese investors: A 15-percent stamp duty introduced for foreign buyers in Hong Kong and Singapore, where cash-rich mainland Chinese had been blamed for driving up prices, has cooled interest, while Canada recently canceled its Immigrant Investor Program, popular with wealthy Chinese.

Australia, in contrast, may ease rules on a visa scheme aimed at luring investment from wealthy Chinese after complaints that disclosure requirements are too strict, lawyers and migration agents have said.

Australia is now the second-most favored destination for Chinese property buyers, behind the United States but ahead of Canada and Britain, according to Juwai.

Property investment into Australia provides an emigration option to Chinese buyers and can also establish a base for their children's education in an English-speaking country.

It also offers the kind of robust, independent legal system sought by those looking to shield their assets from the Chinese authorities.

“A somewhat more disturbing motivation for emigration and shifting capital out of China is that many are seeking protection of their wealth for both economic and political reasons,” said CLSA's Andrew Johnston, without elaborating.

Tip of the iceberg

An Australian government inquiry into foreign residential real estate investment policy is due to report on October 11, but consultants and researchers Reuters spoke to did not expect any rule changes that could hurt the construction sector.

Existing regulations restrict non-residents to buying only new-build property.

Chinese property developers have been aggressively investing abroad to cater to domestic demand and to diversify their assets in response to a cooling property market at home.

Hong Kong-listed Wanda Commercial Properties has set up a $1.6-billion fund to invest in Australian real estate, while China's Greenland Holding sold every apartment in a Sydney project last year within the first three hours for a total of 2 billion yuan [$325 million].

Century21 and Fairfax Media's Domain.com, Australian real estate portals, have launched Chinese language websites, and REA Group recently announced that SouFun, a major real estate online marketplace in China, would carry Australian listings.

Australian developers are also flying to China to promote their properties.

“I think this investment is a tip of the iceberg,” said Warren Duncan, director at real estate agent LJ Hooker. “It is such a small portion of developers and purchasers from China that have bought in Australia compared to the population of China. So, the trend will continue for a long time to come.”

 

You May Like

India PM Modi's Party Distances Itself From Religious Conversions

BJP under fire for being slow to rein in hardline affiliate groups allegedly trying to promote Hindu-dominant agenda by luring Muslims and Christians to convert More

Anti-Whaling Group Found in Contempt of Court

Radical environmentalists who threw acid and smoke bombs at Japanese whalers in the waters off Antarctica continue their campaign to disrupt Japan's annual whale hunt More

UN's Ban Urges End to Discrimination Against Ebola Workers

Ban was speaking in Guinea on the second day of a whistle-stop tour aimed at thanking healthcare workers of the countries at the heart of the epidemic More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Decision on Cuba Underscores Divisions Among Miami Cubansi
X
Sharon Behn
December 19, 2014 9:34 PM
For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video US Decision on Cuba Underscores Divisions Among Miami Cubans

For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video Three Cities Bid for Future Obama Presidential Library

President Barack Obama still has two years left in his term in office, but the effort to establish his post-presidential library is already underway. The bid for the Obama Presidential Library is down to four locations in three states -- New York, Hawaii, and Illinois. As VOA’s Kane Farabaugh reports, each of them played an important part in the president’s life before he reached the White House.
Video

Video Cuba Deal is Major Victory for Pope’s Diplomatic Initiatives

Pope Francis played a key role in brokering the US-Cuba deal that was made public earlier this week. It is the most stunning success so far in a series of peacemaking efforts by the pontiff. VOA religion reporter Jerome Socolovsky has more.
Video

Video Fears of More Political Gridlock in 2015

2014 proved to be a difficult year politically for President Barack Obama and a very good year for the U.S. Republican Party. Republican gains in the November midterm elections gave them control of the Senate and House of Representatives for the next two years -- setting the stage for more confrontation and gridlock in the final two years of the Obama presidency. VOA National Correspondent Jim Malone has a preview from Washington.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8143
JPY
USD
119.23
GBP
USD
0.6390
CAD
USD
1.1596
INR
USD
63.304

Rates may not be current.