The Foreign Investment Review Board last week released its latest annual report. On page 31 of the document, there’s a nice fullpage chart, which shows exactly how much investors from different countries have been approved to spend on Australian assets. In the prior year’s report, Chinese investors already obtained for more approvals to invest in real estate than any other nationality group. This year, they have become the largest investor in total, across all categories.
Here are the most interesting of the numbers in the new FIRB report:
• 2013 China real estate approvals: $5.9 billion
• 2014 China real estate approvals: $12.4 billion
• Annual increase in China real estate approvals: 109%
• 2014 China share of total real estate approvals: 16.6%
• 2013 China share of total real estate approvals: 11.4%
The Chinese increased by the most and reached the highest total amount. But the following nationalities also boosted their investment this year: Singapore, the Netherlands, New Zealand, Hong Kong and the USA. What’s the key message for the real estate industry to take away from this report?
The top conclusion is that Chinese buyers can be a valuable and profitable element of any real estate business in Australia, if the principals and agents make that their goal. On the whole, the Chinese like Australia. That’s why they are not only the top investors, but also the top tourists, top foreign retail buyers and top foreign student group. With the difficulty the Australian economy has faced in the past year, the rise of the Chinese buyer has been a lucky break for the Lucky Country.
Their investments have been welcomed by Australian vendors, and also generated jobs and new housing for locals (four new homes for locals, for every home they buy). But let’s not get carried away here. For Australia to continue to capture a large share of Chinese investment, both agents and governments need to work at it. The government is still learning this lesson.
For agents, the good news is that the things you do to attract Chinese buyers are also good for you. Chinese buyers are like other buyers in this respect. They favour agencies and agents who intentionally seek them out and show them you want their business. Agents in the US, the UK, New Zealand and other countries are awake to the opportunity. They understand that Chinese investment will only grow in the years to come. And they want to be the ones to help those Chinese buyers find their overseas property.
For vendors, the takeaway is to make sure your agent lists on Juwai.com. Ask them to show you the listing. For agents, this means finetuning your marketing effort, translating your listings and materials into Chinese and perhaps even traveling to China to attend an Agent Summit or property expo.
The payoff will be faster sales, higher prices and vendors who are both more satisfied and more numerous. So, that’s what the latest FIRB report means to the real estate industry. It means the industry should congratulate themselves for doing well with Chinese buyers in the past year, and get down to work to repeat the success for the year to come.