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Singapore investor picked up the slack in Australia’s commercial property market as Chinese investments plunged by 69 percent year-on-year in the first half of 2017, reported the Sydney Morning Herald.
In fact, the city-state was the biggest source of overseas capital for Aussie commercial properties during the said period, said James Quigley, Cushman & Wakefield’s Head of capital Markets for Australia and New Zealand.
“Despite the decline in investment from mainland Chinese, Australian property investment volumes are on track for another robust year supported by investors from Singapore, Hong Kong, the US and Germany as well as local institutions such as Dexus and Charter Hall.”
Investments from China plummeted after Beijing imposed stringent capital outflow measures to strengthen the yuan. On Friday (25 August), the country’s State Council announced the first set of guidelines on overseas investment by Chinese firms. For example, spending on hotels and foreign property development are now “restricted”, while investments in casinos and defence technology are not allowed.
According to Cushman & Wakefield’s national director for research John Sears, the significant decline in Chinese investment in Australian properties came after Beijing imposed stricter regulations relating to outbound investment.
“Areas which experienced the largest drop in Chinese investment volumes half-on-half were development sites and hotels, down 85 percent and 67 percent respectively.”
While there are fears that a higher decline in Chinese capital would affect Australia’s commercial property market, total commercial investment is expected to remain healthy at about AU$30 billion for the whole of 2017.
“While new capital guidelines for mainland Chinese investors will mean more controlled investment, overall volumes are expected to remain firm and demand for Australian commercial real estate remain robust supported by inquiry from a variety of global sources including Singapore and Hong Kong,” added Sears.
This article was edited by Denise Djong.
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