Chinese wealth boosting property market

Author: Marika Dobbin
Source: theage.com.au
Date: June 6, 2009

A growing number of Chinese people are taking advantage of a relaxation in Australia's foreign investment laws to buy property in Melbourne.

Real estate agents in the eastern suburbs report that up to half the buyers this year have been part-time residents from China, Hong Kong or Taiwan, or Asian companies buying accommodation for their staff.

Auctioneer Robert Ding, of Jellis Craig in Balwyn, started holding auctions in both Mandarin and English in March. A fortnight ago a multilingual auction resulted in the sale of a $1.838 million house in Balwyn.

Agents from Marshall White in Armadale and Hawthorn, are flying to Shanghai this month with plans to establish an office there to draw more Chinese buyers.

"The massive wealth that they've got is quite daunting in some instances," director John Bongiorno said. "What's attracting them is that there's so much space here — it's such a safe haven for them to park their money in terms of good real estate. It's a safe lifestyle, great schooling for their children, no pollution and cheap property by their standards."

A change in foreign investment laws last December means that temporary residents (foreigners who hold a temporary Australian visa for 12 months or more) and those who have applied for permanent residency and hold a bridging visa can now buy established houses as well as new property.

They are no longer required to tell the Foreign Investment Review Board of their property acquisitions, a process that took 30 days and made auction bidding impossible. Foreign companies are also now allowed to buy established homes for their Australian staff.

Barry Jan, of BCI International Consulting, has been running property tours to Melbourne from China for two years, bringing groups of up to 15 buyers at a time.

"We find that there's a bigger influx at the moment because of the change of laws and secondly the strength of the Chinese yuan against the Australian dollar," he said.

Mr Jan holds Australian property exhibitions in China, with one this month in the wealthy mining town Taiyuan, outside Beijing. He then signs people for a tour.

Buyers advocate Christopher Koren said fly-in Asian buyers were keeping prices at the top end of the residential market from collapse because of their strong desire to buy and limited time to make the purchase.

"There's no doubt that overseas investors, predominantly from Asia, are definitely underpinning large sections of the market with their competition," he said. "It's certainly a good thing if you are selling and possibly a curse if you are buying."

Mr Ding said the Chinese were coming for the same reason his parents migrated from Taiwan in 1972, to educate their children in Western schools.

"The education system is very important to the Chinese culture, he said. "They're coming to live. They may spend six months of the year here in Australia, six months of the year back home, or they might do three months on three months off."

The City of Boroondara, where Chinese interest is focused, contains many of Melbourne's top-tier schools: Carey Grammar, MLC, Scotch College, Camberwell Grammar and Xavier College. International student enrolments at those schools are booming.

Mr Ding said Chinese buyers were usually interested in new, modern homes or heritage houses that were fully renovated.

"They don't want to come into a country where they have to renovate because they don't know the rules and regulations of building."

He said he conducted a bilingual auction if he believed most people interested in the property were Chinese.

"I say it in English and then translate it back into Chinese. As long as everyone knows what I am doing, which I am clear about, then it's fine. No one is disadvantaged in any way."

Michael Gornalle, of Karen Gornalle and Associates in Canterbury, said the trend reflected the growing ties between China and Australia.

"Of the properties in our area, (Chinese) can literally be the only 10 people who look at the property," he said. "Generally, when they come out here, they have someone who can negotiate on their behalf, and they are very astute people and obviously coming from a very successful background."