Chinese Government restricts real estate investment in Australia

The State Council of the Peoples Republic of China announced on the 18th August that it was introducing a raft of guidelines in relation to overseas investments.

Restrictions outlined in the list issued by the Council include a defined aim to curtail overseas investment in real estate and hotels.

The moves by the State Council follow commentary by the International Monetary Fund about risks the IMF saw in the Chinese economic strategy

What does this mean for the Australian property market?

Certainly when you look at the statistical data available from the Foreign Investment review Board (www.firb.gov.au) it obvious that the Melbourne, property market closely followed by Sydney, has been the main focal point in Australia of investment from China.

Another point worth considering is that, it is estimated that, of all development sites sold in Australia in 2016, Chinese investors purchased, between 35-45% of them. Given this, Australia may see some a slowing in supply side stock levels as a direct flow on from these Chinese Government decisions.

Earlier attempts to stem foreign investment outflows by the Chinese government saw them limiting foreign currency purchases. These latest changes can be seen as a further attempt to slow capital outflows from China

Australia has not been the only target for Chinese investors, with Europe and the United State of America also being popular destinations for investment.

Leave a reply