Realtors catering to foreign buyers say the pandemic may have given added impetus to buyers to indulge in cross-border purchases and also accelerated the use of new technology tools - virtual walkthroughs, 3-D mapping, drone surveys, webinars and video livestreaming – by sellers to engage with customers who are not able to travel for site inspections or attend face-to-face appointments.

Why are Asians rushing to buy in Australia?

Several reasons currently make Australian real estate very conducive  for foreign buyers:

• Lower prices. Home prices nationally fell 0.6 per cent in July this year, with a 0.8 per cent average decline for capital cities and flat prices in the regions. Melbourne (-1.2 per cent) and Sydney (-0.9 per cent) had the biggest price falls due to the sudden resurgence of Covid-19. And if the conditions do not improve, bigger falls are expected ahead. ⁶
• The Australian dollar has been hit relatively hard because GDP expectations in the country have had to be revised downwards. As a result, there are significant savings for Asian investors who are buying into the Australian market.
• Australia is home to more than 1.2 million people of Chinese ancestry, many of whom only migrated in the last decade - ensuring deep community links. Chinese consumers continue to favour Australia for education and tourism, partly for this reason.
• Australia is popular with foreign students. In 2019, there were over 750,000 international students in Australia,⁷ according to government data. Students from China account for the greatest portion of enrolments in higher education and parents tend to purchase property to accommodate their children studying in the country.
• Australia has performed better in mitigating the pandemic compared to the UK and the US which have been hit harder by the virus. This has convinced cross-border buyers of the country’s better health security measures. 

Australia tops list for commercial property with Chinese

Although the coronavirus pandemic has resulted in the total value of offshore investment plunging by half, Chinese investors are still flocking to the country for commercial real estate investment.

Data from Juwai IQI shows Australia is now the top commercial property investment destination, superseding the US, for Chinese property investors, even though overall Chinese cross-border buying enquiries fell by 27 per cent in the three months to the end of June. 

Sydney attracted the lion’s share of investment at AUD3.2 billion, but that was down 50 per cent on 2019. Investment in Melbourne fell similarly, plunging 47 per cent to AUD1.72 billion in the first six months of 2020.⁸ The lockdowns in New South Wales and Victoria have hit commercial landlords doubly hard as non-essential businesses are not allowed to operate, while a moratorium on eviction of financially-distressed commercial tenants has hampered repurposing of properties.

However, given the relatively small size of Australia’s commercial property market, experts say this continues to show that Chinese appetite for Australia’s real estate has not waned. The preference for Australian assets reveals the country’s strong outlook for yields and capital returns, its close economic ties to Chinese industry, and its positive long-term outlook for economic and population growth.

Looking forward

Notably, China is now the first country to emerge from the coronavirus downturn. Stimulus money and extremely low interest rates are making many Chinese eager to purchase hard assets like real estate. Real estate purchases in China itself are soaring and the demand is spilling over the border into Australia as well as other countries.

Still, there is no crystal ball to determine what will happen with the Australian property market over the coming months as Covid-19 continues to disrupt businesses across the country. Yet this much is certain. Foreign buyers, especially the Chinese, like Australia and if they can afford to buy, they will continue to do so regardless of the situation, say industry observers. 

Sources: 1. ABC News: Australia in its first recession in 29 years as March quarter GDP shrinks; 2. The Sydney Morning Herald: Banks warn house prices could fall up to 30 per cent as rental vacancies surge; 3.Realestate.com: ‘If Chinese buyers can buy, they will’ despite COVID19 delays; 4: NAB Residential Property Survey Q2-2020; 5. Daily Mail: Ultra-rich foreigners are MORE determined to buy up Australian property during COVID-19 and they're not just from China; 6. ABC News: Home prices ease in July but there are warnings of bigger falls ahead; 7.CNBC: Australian official urges international students to consider studying in the country as China claims racism; 8.Australian Property Investor: Australia now top market for Chinese investment