The Chinese government is buying hundreds of millions of dollars worth of Australian real estate a year, snapping up prime properties in Sydney’s CBD, North Sydney and inner suburbs.
Private investors dominate China’s love affair with Australian property but state-owned enterprises from the People’s Republic bought an estimated $260 million worth of commercial real estate in 2014.
The major acquisitions included: Cambridge Office Park in Epping, bought by Poly Real Estate Group for $110 million; the Lucent project at North Sydney, bought by Shanghai’s Greenland group for $58 million; and the Kolotex factory at Leichhardt, also by Greenland, for $45 million.
Chinese investment in commercial property increased almost fourfold last year to $4.37 billion — almost half of all Chinese investment in Australia — as the focus switches from mining to real estate and infrastructure projects, according to a report by KPMG Australia and the University of Sydney China Studies Centre.
“The big turnaround was that so much of this, 94 per cent, was private compared with six per cent state,” said Professor Hans Hendrischke, the Centre’s professor of Chinese business and management. The figures are so vast that even the comparatively small state component is substantial.
The report noted favourable conditions including proximity, high yields and market stability and liquidity. It said Sydney and Melbourne’s commercial real estate outstripped New York and London in 2014 as investment magnets for the Chinese.
Prof Hendrischke said China’s state-owned enterprises operated very much like private companies.
“They are commercial operators, fairly independent, and they go for similar projects as private enterprises.”
Chinese government entities are not considered major players in the booming residential market but in recent years China has acquired a number of significant properties for its operations, including: the old consulate offices in Elizabeth St, Central, a former hotel worth an estimated $15-20 million; and the consulate site in Dunblane St, Camperdown.
The KPMG-Sydney University report said Chinese investors were now likely to switch their focus to other key cities in Australia as well as suburban locations in the capital cities.
Chinese interests say that the investments attracts heavy stamp duties that helped swell NSW government coffers by $7 billion last financial year.