Chinese investors were very active in the Australian commercial property market during the last quarter, pouring more than 25 per cent of total capital into the market, according to CBRE.
Australia is proving popular with Chinese investors and there are a number of factors which suggest the trend is likely to continue. Increased bilateral trade between the two countries is a major factor, while the number of Chinese tourists, immigrants and students heading to Australia bodes well for continued investment.
The increased flow of capital from China emphasises the Reserve Bank of Australia’s concerns about higher risks in commercial real estate. The bank pointed out recently that the search for yields by foreign investors has driven local property prices higher, while driving yields down.
The central bank said that leasing conditions have remained soft in “several local markets,” and oversupply is emerging in Brisbane and Perth office markets. The bank went on to state that these dynamics “increase the vulnerability of the market” to a price correction.
CBRE states that development sites within 5 km of the central business districts of Brisbane, Melbourne and Sydney have been of primary interest to investors. A total of 36 sites sold in these locations in the 12 months ending in April of 2015 were bought by Chinese investors – 16 in Sydney, 15 in Melbourne and 5 in Brisbane.
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