The new Foreign Investment Review Board annual report was recently released, giving the impression that foreign investment is going right where Australia wants it.
At least, that was the sentiment from leading Chinese international property website Juwai.com, whose CEO said the report suggested that the foreign investment regime was working and was one of the few bright spots of the economy.
“Over the past year we have seen growth in Chinese investment level off, from a white hot 90% growth in Chinese buyer inquiries via Juwai.com in 2015 to 28% in 2016,” Juwai.com CEO Charles Pittar said.
He believed that growth will probably be lower still in 2017, unless it receives some sort of push from loosening regulations in China.
“Every Chinese dollar invested landed in the pocket of an Australian somewhere,” he said.
“Chinese investment translates directly into jobs, tax revenue, economic growth and new housing construction.
“There’s nothing about it that any reasonable person can object to. Frankly, China has been a godsend for Australia these past 10 years.
“From the extremely low number of divestments that were forced due to noncompliance, it is safe to conclude that foreign investors are extremely well behaved.”
The Australian Government seeks to maintain an open foreign investment regime which balances encouraging foreign investment flows while ensuring foreign investment is not contrary to the national interest.
- Foreign investment applications grew by 9% to 41,445 in 2015-16 from 37,953 in 2014-15. Most of the growth was driven by residential real estate transactions.
- Total investment approved was up 29% to $247.9 billion, compared to $191.9 billion in 2014-15.
- For the third year in a row, China was the largest source of approved investment ($47.3billion), driven by real estate.
- Residential real estate applications jumped 19% to $72.4 billion from $60.8 billion.
- 98% of all applications, or 40,755, were for residential real estate. Residential real estate applications accounted for 29% of total value.
- FIRB applications were a tidy earner for the ATO, generating $78 million in fees.
- Foreign demand increased prices by between $80 and $122 in Melbourne and Sydney in each quarter.
Based on more than two million buyer inquiries made via Juwai.com, Mr Pittar ranked Australia’s top cities for Chinese property buyers for 2017.
- City of Gold Coast
“The rate of noncompliance is so tiny as to be almost invisible. While estimates show that one in 20 wealthy Australians cheat on their taxes, fewer than one in 1,000 foreign investors cheat in the property market,” Mr Pittar said.
He believed that despite the rapid growth in Chinese investment, worries that Australia was being sold off to the Chinese are unwarranted.
“The U.S. owns about four times more of Australia than China does,” he said.