Chinese property investment strength will continue in 2016

Chinese property investment strength will continue in 2016

28 January 2016 by Joseph Zaja 1 comments
Joseph Zaja

The east coast population centres of Melbourne, Sydney and Brisbane will continue to attract strong property investment from Chinese investors in 2016, with lifestyle being the biggest driver.

Within 20 years, these three cities alone will account for more than 50 per cent of Australia’s total population, according to estimates from the Australia Bureau of Statistics.

Australia’s population growth and building indicators send a strong signal that the nation continues to build its credentials as a highly urbanised, productive and liveable nation. This bodes well in the eyes of global investors, particularly the Chinese. We expect the interest in Australian property from this market will continue to stay strong in 2016 and beyond.

The country’s population is forecast to reach the 24 million mark around mid-February 2016. Ausin has recently expanded its offices to 17 throughout Asia Pacific and now employs more than 600 full-time staff to accommodate Chinese property investment demand in Australia.

With Sydney and Melbourne residential sectors showing strong capital growth characteristics throughout 2015, both cities will continue to attract strong levels of Chinese investment well into the new year. However, with affordability across the local markets weakening, it will be the desirability and locational value of new projects that will have the most appeal. Standard-grade projects in Sydney and Melbourne will not sell well, particularly in China, which is a marketplace that trends towards selective high-end buying.

We see the Brisbane market, with its affordability, strong rental yields and growing lifestyle credentials as being well-positioned globally to attract a much larger share of capital inflow in 2016. 

This city is attracting robust interest due to its infrastructure programs which, when fully functional, will boost Brisbane’s productivity and economic credentials. The airport duplication, which is well underway, and the recent announcement of the billion-dollar Queens Wharf Project demonstrates the trajectory of Brisbane as a new international investment destination.

Despite the slow rebalancing of China’s economy, the strength of the renminbi against the Australian dollar means that Australian residential property will continue to be increasingly affordable.

On a domestic front, China’s concerning pollution levels, particularly the recent red alert status for air quality in Beijing, will continue to challenge liveability standards in China’s tier-one cities. 

We see China’s domestic pollution problems as a major catalyst for international investment.

Considering that China is a nation composed largely of one-child families, the ongoing air quality and health concerns will only increase the appeal of global investment destinations like Australia, where liveability and lifestyle for the next generation of Chinese will be significantly better. A high proportion of Ausin’s clients plan to immigrate to Australia within the next 10 years, and lifestyle is driving this decision.

As part of the Chinese government’s plans to curb pollution, the country is moving towards more dependence on nuclear energy. In December, the government announced a $78 billion investment in nuclear power plants over the next five years, part of a larger plan to have 110 reactors fully operational by 2030. This reduction in fossil fuel dependence is hoped to improve the air quality and curb the negative impact on health and well-being from pollution. 

Until China’s pollution concerns are fully addressed, parents across China will continue to look abroad for investment and lifestyle destinations, with Australia continuing to be a significant drawcard.

Joseph Zaja is the managing director of the Ausin Group. Ausin is one of Australia’s largest privately owned companies providing property, wealth management, lending, property management and immigration advice to Australian and overseas markets.

With over 12 years real estate and finance experience, Joseph has held positions such as financial advisor at MLC Private Client Services and a long-term property and development advisory role to a prominent family-run investment company. He is a member of the REINSW and is licensee of Ausin Group (Australia).

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