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Chinese love affair with Sydney properties continue

Chinese real estate investment Down Under surged to an all-time high last year, especially in Sydney.

While many have expressed concered over a weakening property market in Australia, Juwai.com Co-CEO Simon Henry begs to differ – Juwai data foresees a 15% to 20% increase in 2015 for Chinese real estate investments in Australia.

Even as we head into 2015, the last two months of 2014 saw a sudden flurry of investment activity in Sydney from China, predominantly driven by Chinese developer giants.¹

• Sunshine Insurance – Sheraton on the Park Hotel for US$375 million¹
• Dalian Wanda – Gold Fields House, Circular Quay, Sydney for US$344 million¹
• Shimao Property Holdings – Downtown Sydney office tower for over US$324 million¹
• Vision Investment Group – 233 Castlereagh Street office block for US$102 million¹
• Poly Real Estate Group – Cambridge Office Park for US$89 million¹

Most recently, Fosun acquired a Sydney office block for US$93 million.² Clearly, Australia is winning the hearts of China’s wealthy, and Chinese property investment in Australia remains as popular as ever, if not more.

Favoured destination for emigration

In terms of residential investments by wealthy Chinese, part of Australia’s allure lies in its brand-new fast track Premium Investor Visa (PIV) – a 1-year accelerated channel for foreign investors to acquire permanent residency, particularly Chinese HNWIs (high net worth individuals).

Other factors include its fantastic lifestyle, weather, quality education, proximity to China, and its existing Chinese community, which is sizable and well established.^{5, 6} Many have a sprawling network of family and business connections in Australia.⁶

All these combine to make Australia the perfect place to migrate to for an enriched lifestyle, and it was clearly evident in 2014, in which Sydney and Gold Coast marked record growth from Chinese investment.

“As the credibility of the Australian property market continues to strengthen in China, the level of investment will undoubtedly increase,” says Brian White, Chairman of Ray White⁷ – a Juwai partner and one of Australia’s leading real estate group.

Sydney in 2015

According to data from CPM Group and the BIS Shrapnel and CommSec forecast, Sydney housing prices are expected to rise between 5% and 7% – slower than its 12.4% increase in 2014.³

However, housing prices will fall slightly after the first half of 2015 before flattening, and finally stabilising as housing supply and demand slowly balance out.

Investor focus will fall on areas with improved infrastructures and amenities, such as South-west and North-west Sydney, as well as the suburbs at the outskirts of Sydney, which are fast gaining popularity.⁴

For those targeting Chinese buyers keen to invest with rental ROI in mind, here are three up-and-coming suburbs to watch in 2015⁴:

Liverpool

Affordable housing prices here has long made Liverpool the #1 choice for first homebuyers in New South Wales. Demand is expected to increase, though, due to major increase in infrastructure currently still in the works.

Median price: A$ 560,000

Camden

Construction of the South West Rail Link here has led to increased demand and population growth. According to the Australian Bureau of Statistics (ABS), an estimated 100,000 houses will be built here over the next 20 years.

Median price: A$482,000

Penrith

Increasingly improved infrastructure have caused this area to boom, particularly with buyers unable to afford inner-city properties. Demand is growing, and so is profits from early sellers.

Median price: A$441,000

Sources: 1. Mingtiandi.com; 2. Mingtiandi.com; 3. CPM Group & BIS Shrapnel and CommSec forecast; 4. Sohu.com; 5. Juwai data; 6. The Sydney Morning Herald; 7. Business Spectator