The recent Chinese New Year holiday was a litmus test for the strength of Chinese demand for Australian real estate, with many investors combining the holiday period with buying property.
Investorist, the global off-the-plan marketing site, surveyed its agents to gauge the level of interest in Australian property around the time of the Golden Week holiday and found the level of interest remained strong, despite capital blocks in China and tightened borrowing conditions in Australia.
The survey found 60 per cent of Golden Week travellers to Australia took the time to inspect property on their holiday.
It appears the clamp down by the banks on lending to foreign nationals for property purchases was not deterring buyers, who were able to find finance elsewhere. The survey found 40 per cent intended to use vendor finance for their purchase.
Jon Ellis, founder and CEO of Investorist, told SCHWARTZWILLIAMS that developers are filling the funding gap left by the banks.
"We have several of our developer clients offering vendor finance to purchasers, and this has been a popular option with Chinese investors," he said.
"The big four banks' policies have opened up many opportunities for others to step in and fund foreign purchasers; where there is demand in a market, there will be companies willing to supply," he said.
Ellis told SCHWARTZWILLIAMS one of his Australian clients is launching a $1.5 billion private non-bank fund at Investorist's China Connection event in March. The fund will offer loans to any purchaser who meets the lending criteria, said Ellis.
Ellis confirmed there is still strong interest from Chinese investors in Australian property.
"Whilst demand for property has slowed in the major cities," he said, "the majority have not been deterred - it has just made them more resourceful in terms of securing the funds to achieve their investment goals."
A total of 60 per cent of survey respondents said ‘education’ was the main reason for investing in Australia, 25 per cent said their purchase was an investment, and 15 per cent said migration was their main reason for buying property in Australia.
"The fundamentals of why [Chinese investors] love this country are still in evidence; blue skies, clean air, open spaces, quality schools and a stable political and economic environment," said Ellis.
Half of Investorist's clients intended to spend between $300,000 and $500,000 on property in Australia, while 30 per cent were targeting property worth between $500,000 and $1 million, and 20 per cent were looking to buy property worth more than $1 million.
The survey comes as the CBRE report Asian Outbound Investment in 2016 shows China replaced Singapore as the largest source of outbound capital invested in real estate in the last quarter of 2016.
The report said, "Chinese outbound investment intentions will remain strong in 2017. However, activity is expected to slow as tighter capital controls will lengthen the deal process, particularly for larger sized deals."
Chinese investors accounted for almost half of the $60 billion worth of investments in overseas real estate last year by Asian investors, up sharply from 28 per cent of the $62.4 billion spent in 2015, according to the report.
US real estate remained the top destination for Asian investors in 2016, with 43 per cent of the total, followed by Europe, the Middle East and Africa at 27%, Asia with 23%, and Australasia accounting for the remaining 7%.
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