Chinese Developers Double Down on Australian Property

Australia’s slowing housing market has seen the total value of Chinese-backed investments fall to $1.3 billion last year.

As we usher in the Chinese New Year this week, the figures by Knight Frank’s Market Insight 2019 report reveal these numbers are down from $2.02 billion in 2017.

Although Chinese developers have secured their presence in the market, acquiring up to 31 per cent of total development sites nationally last year.

Knight Frank head of residential research Australia Michelle Ciesielski says the drop underlines Chinese developers have met with challenges throughout this time.

“From the Chinese government attempting to moderate capital outflow, to locally, the impact when major domestic banks restricted lending to offshore borrowers… all of this has had an impact on Chinese outbound investment.”

In the past 12 months the likes of Zone Q, China Poly Group, Yuhu Group and Aqualand have increased their exposure to office assets, Knight Frank head of Asian markets Australia Dominic Ong believes this trend is likely to continue in 2019.

“The majority of Chinese developers who have entered the Australian landscape are settling in for the long haul, now diversifying their portfolios to adapt to local market trends.

Ong also said Chinese developers are shifting focus towards lower-density residential with 41 per cent of sites purchased suiting low-density in 2018, this portion up from 29 per cent in 2017.

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Almost 11 per cent of all new apartments built last year were by Chinese developers, concentrated on the major east coast cities of Brisbane, Sydney and Melbourne, this share is also projected to rise to 22 per cent in 2021 for the major Australian cities.

Ciesielski says this includes projects which have already commenced, and those with development approval which are currently being marketed.

“With current headwinds heading into 2019, the likelihood of all projects proposed by Chinese developers going ahead over the next couple of years is diminishing, except those with an exceptional product,” she said.

“Going forward, developers – both Chinese and local – must hold realistic expectations following a residential market in correction mode after a lengthy period of significant growth.

“It will be imperative proper time is allocated to strengthen their position in the market for when the time to proceed arrives.”

Symbolising wealth and prosperity, this year the Chinese New Year meets the “Yellow Earth Pig”, the twelfth and last of the Chinese Zodiac.