Australian commercial property back in favour with Chinese
Melbourne’s commercial property market is batting off the gloom about a decline in Asian investment with a run of hefty retail and office deals.
Investors have been hit by China’s tightening of capital outflows but are still targeting the city, with CBRE selling 21 properties worth more than $550 million to Asian groups in just over four months. The purchases, some of which have been financed by offshore lenders, include the subregional shopping centre Burwood One, which sold for $181 million to Kowloon-based investor Si Feng.
Other major deals include local property tycoon John Beville selling an office block on leafy St Kilda Rd for $163 million to Chinese mainland investor Da Xie.
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A tower at 277 William St was picked up by Hong Kong’s KHI Holdings for $93.8 million.
CBRE national director investments, Mark Wizel, says there is no doubt that some of the investment funds had come from China via family links, as well as money that had already been transferred to Australia.
However, he says is impossible to put a precise figure on how significant the offshore component had been.
509 St Kilda Rd, Melbourne was bought by a Chinese investor.
“There is absolutely no doubt that Chinese offshore investment has declined significantly over the last 12 to 18 months but it now seems clear that Chinese money has begun to flow again. How significant that new flow is we will see over the next two months and into the new year,” he says.
Wizel says the fall in the value of the Australian dollar has drawn capital, while the decline in residential property clearance rates has also had a positive effect on Chinese buyer confidence in commercial property investment opportunities.
“Should the dollar fall further, and that may well occur as the US currency continues to strengthen, we are likely to see a greater level of activity financed by offshore money,’’ he says.
Wizel says Chinese buyer confidence in Melbourne remains high, with Australia still the second most favoured Chinese property investment destination behind the US.
He says a greater concern for some investors is how to get funds out of China in light of Chinese economic pressures.
In other parts of Australia, debt-laden Chinese groups have come under pressure to divest their holdings, including Sydney towers and Gold Coast projects.
After a period of state-backed companies dominating, Wizel says the significant growth in private wealth across Southeast Asia, and also India, is likely to see a higher proportion of purchases by wealthy individuals.
This article originally appeared on www.theaustralian.com.au/property.
