Purchases of Sydney real estate by Chinese investors has reached an unprecedented peak, with one industry insider estimating that as many as 80 per cent of homes in certain parts of the city are being sold to buyers from China.
John McGrath, chief executive of McGrath Estate Agents, told Bloomberg the Chinese investment drive which Sydney’s property market is currently witnessing hasn’t been seen for a generation.
“I haven’t seen a trend like this in 30 years, in terms of a brand new demographic group entering the Australian market with so much impact as I’ve seen in the last 12 months,” said McGrath in a television interview.
According to McGrath, in some parts of Sydney as many as 80 per cent of homes are being sold to Chinese buyers, spurred by capital growth expectations as well as the practical exigency of housing children who may be studying abroad at universities in Australia.
The latest data from the Foreign Investment Review Board indicates that China became the third largest source of foreign investment for the Australian real estate sector in the 2012 fiscal year behind the US and Singapore, with $4.2 billion in purchases. This volume of transactions marks a staggering 75 per cent leap compared to investment levels just two years ago.
Enthusiasm for Australia estate among Chinese investors has been further spurred by strict restrictions on property purchases back home as Beijing struggles to contain a bubble in China’s own real estate market, as well as by record low interest rates which can be pegged for lengthy periods.
In response to the surge of demand from Chinese investors, McGrath has established a Mandarin-language desk in Sydney, and is mulling the establishment of operations in China itself.
Other Australian realtors have already taken the initiative of opening offices in Asia itself, at the expense of operations and potential clients in their own home market.
“We’re hearing that a lot of developers now aren’t even marketing in Australia,” said NAB senior economist Robert De Iure. “They’re marketing them in Hong Kong, Singapore and China, and we’re not even getting a look-in.”