Chinese property ‘buying spree’ to accelerate in 2015

Australia’s Free Trade Agreement (FTA) with China is expected to boost Chinese acquisitions of real estate portfolios across the Australian eastern seaboard.

Justin Epstein, founder and executive director at One Investment Group said Australia is viewed by foreign investors as a safe haven, given our economic stability and transparent regulatory environment.

“In the past year, there has been significant buying activity among Asian investors interested in securing Australian residential land banks, hotels, office buildings and agricultural landholdings, and we expect this to grow substantially now that the agreement is in place,” Mr Epstein said.

“Chinese developers for instance, have snapped up development sites in major Australian cities such as Melbourne worth billions of dollars,” he said.

Mr Epstein explained that the falling Australian dollar is making local property assets cheaper and more attractive to foreign investors seeking a stable market to invest their capital.

“This buying spree isn’t expected to slow and competition for quality assets between local and Chinese buyers will likely push up prices for in-demand locations in 2015,” says Mr Epstein.

One Investment Group has considerable experience in providing trustee and managed investment trust (MIT) services to foreign investors acquiring Australian property and infrastructure.

The group is currently working on numerous foreign client transactions, totalling in excess of $1 billion in property assets.

“Given the measures that the Chinese government has taken to put the brakes on property speculation at home, the FTA opens more doors for Chinese investors eyeing Australian developments, hotels, and agricultural and residential assets,” said Mr Epstein.

“I think 2015 will be an interesting year,” he said.

Last month, a report by the House of Representatives Standing Committee on Economics made 12 recommendations that could see a regulatory overhaul of enforcement and penalties to curb foreign buyers, including a national register and greater surveillance of the funding sources of certain foreign nationals.

The report also recommended a mandatory application fee of $1,500 on all foreign property buyers.

It highlighted sources of financing as a growing concern, raising fears of a strong possibility that shadow banking may be involved in some cases.

“The extent of this issue is uncertain but it would be prudent to ensure that any transactions involving an overseas purchase of an Australian property can be thoroughly investigated if considered suspicious,” the committee recommended.

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