Chinese property investor boom coming to Australia by 2025

Rich Chinese property investors are eyeing up Australia, with over 700,000 expected to migrate overseas in the next 2 years.

The latest ranking from Juwai IQI shows that Australia ranks number one as the top overseas destination for Chinese property hunters.

Australia comes ahead of all other global markets, including Canada, the UK, and the US, which came in second, third, and fourth place respectively, based on the number of inquiries that rich Chinese investors have made on the investment platform during the first 6 months of 2023.

Top 10 places Chinese are buying homes overseas

Source: Bloomberg/AFR

In fifth place were Thailand, Malaysia, and Japan.

The United Arab Emirates, which ranked 13th in 2021, shot up to eighth place while Germany fell out of the top 10.

Vietnam and Singapore accounted for ranks 9 and 10.

Chinese will buy even more Australian property

Kashif Ansari, group chief executive officer and co-founder of Juwai IQI explained that many real estate transactions are dependent on Chinese buyers being able to go abroad.

At the moment, Chinese travel is still at low levels, with outbound travel still yet to rebound to pre-pandemic levels thanks to limited airline capacity and high travel costs.

But as international travel resumes he expects that Chinese interest in overseas property markets will only grow further.

Juwai IQI’s report expects that a sustained exodus over the next few years will continue to drive Chinese property investments abroad with around 712,000 people from the country anticipated to migrate to the US, Canada, and Australia between now and 2025.

The country's hard COVID-19 lockdown rules and restrictions, combined with President Xi Jinping’s push for “common prosperity” means China’s wealthy have been flocking to more welcoming places such as Singapore or setting up a backup plan.

And the report expects capital flight from the mainland could reach US$150 billion ($221 billion) this year, as more Chinese people move their money abroad.

Interestingly, Western countries have long been a mecca for Chinese immigrants, but South-East Asia has emerged as a hotspot for high-net-worth Chinese individuals, with residents attracted by “golden visa” programs that fast-track investors and professionals to residency.

Chinese citizens are the biggest source of demand for golden visa programs across the globe, which can allow people to stay as long as 20 years.

In 2021, Chinese accounted for 46% of approved applicants in two of the most popular programs: Greece and Australia, and 31% of approvals for Portugal.

Australia pulled back the welcome mat to foreign investors

While foreign investors largely underpinned the presales for the many apartment towers built in the past decade, they have been largely shut out of Australia’s property market over the past few years as Australia’s physical border closure kept international arrivals at a bare minimum.

More than that last year our federal government doubled the fees foreign investors  must pay to buy a property here

We have to remember that developers must pre-sell a large percentage of their properties in proposed apartment towers in order to get property development finance.

At the moment there are very few large apartment buildings coming out of the ground because they are not financially viable amid soaring construction costs and construction completion uncertainty.

Taking away a stream of buyers when the market is tight is only going to worsen the current rental crisis.

Without finance, these buildings won’t be constructed, and without an uptick in dwelling supply, the number of rental properties will only tighten further, forcing rents to continue skyrocketing.

Note: Don’t forget that foreign buyers can only buy new or off-the-plan residential properties.

In general, they can’t buy established residential properties meaning they are not competing with Aussie home buyers or most investors.

But with the lifting of China’s travel restrictions and the return of foreign-enrolled students to Australian campuses, I can only see China’s demand for new and off-the-plan sectors continue to remain strong.

About Brett Warren Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.