THE PROBLEMS are there … we seem to be in the deep Egyptian River.
NEW ZEALAND has taken steps to limit foreign investment, making the sale of their domestic housing off limits to foreigners –
WHY are we so adverse to stopping this export of our housing title deeds?-
WHY can foreigners buy Australian domestic housing but Australians can’t do the same elsewhere?
-A Whole Cohort of Australians are locked out of the Australian Domestic Housing Market!!
WITH foreigners buying Australian domestic housing why do governments say this is not having an effect on supply and further decreasing the availability of affordable housing for Australians?
WITH such policies in place can we trust Australian politicians to protect the interests of Australians, or are they seeking to please foreign interests?
THIS article is related to 2017 and earlier …
IMAGINE how much this looming sovereignty concern has grown in the last 2 years!!
Chinese developers and investors purchased a total $2.4 billion worth of Australian residential development sites in 2016; 38% of total sales.
Residential development sites purchased by Chinese developers and investors, had an average area of 21,045 sq m in 2016; increasing more than 18 times from 2012.
In 2016, Australian development sites purchased by Chinese developers and investors averaged a potential 502 dwellings per development site.
MICHELLE CIESIELSKI Knight Frank Residential Research Follow Michelle at @MCiesielski_AU
Almost one-sixth of the world will observe the Chinese New Year starting 28 January 2017; the most important time in the Chinese calendar. As Chinese communities head into the Year of the Rooster, we reflect on the rise of Chinese residential developers in Australia.
Gong Xi Fa Cai! Chinese developers and investors purchased $2.4 billion worth of Australian residential development sites in 2016. This was 9.4% stronger than recorded in the prior year.
This trend has been emerging over the past five years while the Australian residential market collectively strengthened throughout 2012 and in 2013, growth in sales turnover encouraged prices to rise for local developers and investors alike.
At this time, the Australian dollar became very favourable against other currencies for investment into Australia. The Chinese renminbi was no exception. Opportunistic developers, many for the first time, considered Australia to build their next development after becoming a household name in homeland China.
It was considered, and still is to some extent, worth the risk to build a first-time signature development (even if profitability resulted to be just breakeven) to be accepted as a reputable developer, by the local Australian market.
Despite overall total sales falling during 2016, and sales to Chinese developers and investors are still 11.2% lower than the market peak recorded in 2014, their influence has grown.
In the past three years, Chinese developers and investors accounted for over 25% of disclosed total sales each year with 2016 recording a share of sales as high as 38%.
CHINESE DEVELOPERS IN AUSTRALIA JANUARY 2017
As Chinese developers gain confidence in the local market, diversify and move towards lower density developments, the sites transacted have increased significantly in average size—increasing more than 18 times since 2012, to average 21,045 sq m in 2016.
The last significant expansion in size area was experienced in mid-2013 when multistaged sites suitable for high-density were strongly pursued.
Analysing Australian development sites transacted by Chinese developers and investors in 2016 found the average development site purchased could yield 502 potential dwellings. This has jumped 13% from an average 444 potential dwellings from 2015 sales.
Despite Chinese developers being visible in Australia pre-2012, for many this was only possible with a pre-established local connection before arriving in Australia.
In 2012, the scale of the residential development was much smaller with the average site transacted having an area of just under 1,200 sq m with an average potential 103 dwellings yielded per site.
It was in 2013 the rise of the Chinese developer became most evident in Australia.
Prior to this, some developers arrived to inspect their previously unseen site, sometimes having had minimal due diligence carried out; an essential element carried out by local developers to satisfy lending institutions requirements.
For many, these brave investments paid off with the on-selling of sites once development applications were approved; off-the-back of an upward trajectory in values, before demolition even began.
For some, purchasing an income-producing property was a wise move while liaising with local industry professionals to seek the highest-and-best-use for the site, and tackling the rising cost of construction across the country.
Opportunity still remains in Australia to continue to meet the Federal Government’s mandate for increased foreign investment to add to the housing stock.
Long term strategies must now be devised to allow for the Chinese government tightening the ease of outbound capital flow, and local lenders limiting funding to control their liquidity and satisfy APRA requirements.
But one thing is clear—Chinese developers are determined to succeed in Australia, and, for many generations to come.
FOR FIGURES 1, 2 AND 3 VIEW SOURCE LINK!
Source: Knight Frank Research
FIGURE 1 Australian Residential Development Sites Purchased by Chinese Developers and Investors % portion of disclosed total sales, by value
THE RISE OF CHINESE
THE RISE OF CHINESE DEVELOPERS IN DEVELOPERS IN AUSTRALIA
MARKET INSIGHT JANUARY 2017
Residential development site sales suitable for low, medium and high density; threshold of $2M+ for all states, with the exception of NSW & Victoria being $5M+. 2% 11% 27% 26% 38% 0% 20% 40% 60% 80% 100% 2012 2013 2014 2015 2016
CHINA LOCAL & OTHER COUNTRIES RECENT MARKET-LEADING
Global House Price Index Q3 2016 Foreign Investment in Australia Insight July 2016 The Wealth Report 2016 Knight Frank Research Reports are available at KnightFrank.com.au/Research Australian Residential Review December 2016 © Knight Frank 2017 This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be accepted by Knight Frank Research or Knight Frank for any loss or damage resultant from the contents of this document.
As a general report, this material does not necessarily represent the view of Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is not permitted without prior consent of, and proper reference to Knight Frank Research.
RESEARCH & CONSULTING
Michelle Ciesielski Director, Residential +61 2 9036 6659 Michelle.Ciesielski@au.knightfrank.com Paul Savitz Director, Consulting +61 2 9036 6811 Paul.Savitz@au.knightfrank.com Matt Whitby Group Director Head of Research and Consultancy +61 2 9036 6616 Matt.Whitby@au.knightfrank.com
CHINESE DEVELOPERS IN AUSTRALIA