Chinese investors have made a comeback in the Australian property market, accounting for 53 per cent of transactions undertaken by CBRE’s Melbourne City sales team in the second half of 2016.
CBRE national director, city sales and Australian retail investment properties Mark Wizel says the tide has turned following a slow first six months last year, which saw sales to Chinese investors drop to a four-year low.
“In the first half of 2016, just 18 per cent of our sales were to mainland Chinese buyers, highlighting the obvious impact capital control measures from the Chinese government has had on our market,” Mr Wizel said.
“Post-August, however, what we saw was quite incredible, with 75 per cent of the 45 development sites transacted by CBRE in Melbourne sold to mainland Chinese buyers.
“What we tend to see is that capital moves in waves, with quiet periods usually lasting around three months, but in 2016 this downturn lasted seven months.”
Mr Wizel said the re-emergence of Chinese buyers in the market is “stronger than ever”, with the last five months of 2016 culminating in more properties sold to mainland Chinese buyers than in any other five-month period since 2009.
“I think in many instances, what has occurred is that the flow of Chinese capital stayed under the radar of many commentators, not just in Australia, but [also] in places like America, Canada, Chile and the United Kingdom, thus a lot of diversification coming out of China occurred very early in the cycle and came in large quantities to places like Australia,” he said.
“We have definitely seen a slowdown in interest from some of the bigger-listed Chinese developers and we didn’t see a huge level of activity from groups such as Greenland, Fosun, Vanke, Wanda and R&F in the closing months of 2016 but we expect this to change quickly in 2017.”
CBRE says several developers have cemented their confidence in the Australian market with one or more large projects, such as Dalian Wanda Group’s Jewel development on the Gold Coast.
Mr Wizel said 2016 was defined by consolidation. He believes there is a need to look beyond just Chinese developers and their associated companies.
“What we saw in 2016 was strong activity and progress made by Chinese building companies, Chinese banks and Chinese-linked private equity firms all looking to position themselves in the Australian commercial real estate market over the next five years.”
Highlighting the growing confidence of Chinese buyers is a shift and expansion of asset class, with buyers increasingly looking beyond development sites as the property type.
“Over the past six months, there has been a noticeable shift in sentiment, with up until recently 85 per cent of all activity relating to transactions in the development site space. We’re now seeing more interest in hotels, shopping centres, office buildings and leisure properties,” Mr Wizel said.
[Related: Chinese market doesn't sleep, says Ellis]