Chinese buyers rekindle interest in Australian properties

Australia was the number one destination for Chinese buyers of overseas real estate, according to a new report from Juwai IQI.

Co-founder and group chief executive of the proptech firm, Kashif Ansari, noted the most popular destinations are “all the traditional, wealthy Anglo countries with world-leading educational sectors”.

The Land Down Under was followed by Canada, the United Kingdom and the US.

But data showed Chinese buyers are also scouting properties not too far from home, with the South-East Asian countries of Thailand (fifth), Malaysia (sixth), Vietnam (ninth) and Singapore (10th) also included in the top 10 destinations for Chinese cross-border home buyers.

The only non-Anglo, non-South-East Asian destinations in the top 10 were Japan, ranked at seventh, and the United Arab Emirates (eighth), which has moved up the list rapidly in recent years after ranking 13th in 2021. Notably, the UAE entered the top 10 for the first time in 2022 at ninth and this year placed eighth.

Mr Ansari said that while the pandemic saw outbound travel from China almost ground to a halt, 2023 is a “historic year of recovery”.

“A long trend of rapid annual growth that had turned China into the world’s most important source of tourists ended in early 2020. A similar era is beginning again in 2023,” he stated.

Before the pandemic, he described Chinese tourists as the “world’s busiest travellers”, making more trips and spending more in total than tourists from any other country.

“In 2019, mainland Chinese tourists took 155 million outbound trips and spent a total of $255 billion, which accounted for 17 per cent of global outbound travel expenditure,” he stated.

Due to the pandemic, Mr Ansari said the number of scheduled international flights from China dropped from more than 40,000 in 2019 to well less than a thousand in 2020, 2021 and 2022.

By June 2023, he cited Cirium data which showed the figures had only recovered to an estimated 45 per cent of pre-COVID levels.

“Since the borders reopened, travel has been recovering rapidly, although not as fast as many first expected. The number of scheduled international flights from China surged from fewer than 1,000 to more than 15,000 by June 2023,” he stated.

Mr Ansari said the biggest “stumbling block” to a faster recovery in international travel is airline seat capacity and, by extension, ticket prices.

“With capacity still at around 37 per cent of pre-pandemic levels, tickets are still shockingly expensive. The prices of tickets for Dragon Boat Festival holiday overseas travel were double what they were in 2019,” he stated.

As travel restrictions ease and international flights gradually resume, Mr Ansari noted the ongoing recovery in Chinese travel will play a pivotal role in Australia as a top destination for property buyers.

“Chinese overseas property buying fell by 30 per cent to more than 50 per cent during the pandemic, depending on the destination market. That demonstrates that about half of transactions are dependent on buyers being able to travel.

“For this reason, we closely track the resumption of international travel. Where Chinese consumers step off the plane, increased property investment will follow,” he explained.

As Chinese international travel rebounds, Ms Ansari noted buyers from the country have accumulated capital to invest in international real estate.

“Even with China’s slower economic growth in 2023, the country is adding more households to the upper middle and high-income classes than any other,” he said.

Citing data from Ernst & Young, Mr Ansari said the number of households in the high income category that can afford to purchase international real estate will increase by 50 per cent by 2025.

“Logically, Chinese demand for international real estate will also increase proportionately,” he said.

The number of upper-middle and high-income urban households swelled by 39 million between 2019 and 2021. Looking forward, the figures are forecasted to rise by another 71 million – to a total of 209 million – by 2025.

Additionally, Mr Ansari explained: “These households also have historically high levels of savings that can be invested.”

China’s official data revealed that the pandemic further amplified the already remarkable savings habits of Chinese consumers. In just the first nine months of 2022, the value of Chinese savings deposits surged by a staggering RMB 26.3 trillion (equivalent to US$3.6 trillion).

Adding to the case for cross-country buying in Australia, Mr Ansari said China’s slower domestic property market growth and the allure of international real estate investment as a stable and uncorrelated asset further drive their interest.

“Overseas, Chinese investors are drawn to real estate investment as an easily understood category that is expected to provide price appreciation and dependable long-term foreign currency income that is uncorrelated with the Chinese economic cycle.

“In this era of higher interest rates, Chinese investors with access to ready capital have an advantage over local buyers,” he stated.