Investment in Australia up 12%
Chinese people favor real estate, infrastructure
Chinese investment in Australia rose 11.7 percent in 2016 to A$ 15.36 billion ($ 11.49 billion) thanks to growing interest in the country’s commercial real estate, infrastructure and agriculture sectors, according to a report released Monday by KPMG and the University of Sydney.
Australian companies signed a record 103 deals with Chinese companies in 2016, the report said. In 76 percent of those deals, private Chinese companies made the investments, which accounted for nearly half of the total value of the deals.
Australia remained the secondlargest recipient of Chinese outbound direct investment after the US, the report said. Australia received $ 90 billion in new Chinese investment from 2007- 16.
Commercial real estate remained the sector that attracted the most Chinese investment, receiving 36 percent of the total, the report said.
Infrastructure followed, accounting for 28 percent. Infrastructure in- vestment in 2016 was driven by multibillion- dollar Chinese investments in the logistics company Asciano and the Port of Melbourne.
There was a significant change in real estate investment in 2016, the report noted. Chinese investment in residential developments accounted for 51 percent of the total value of their real estate investments in Australia, up from 27 percent in 2015.
Zhang Jiayuan, an analyst at China Investment Consulting Co, attributed the Chinese investment surge in Australia to domestic investors’ inclination to seek overseas asset allocation due to the sluggish Chinese stock market and tougher regulations on the domestic housing market in 2016.
“Given China’s economic context, domestic investors shifted attention to global markets to preserve the value of their assets,” Zhang told the Global Times on Monday.
Zhang noted that this was not an isolated case, and Chinese investment also increased in other markets including the US and Japan.
Chinese investment in Australia still has large scope to grow and large annual gains will be achieved in the coming three to five years, Zhang said.
The report said that 2016 was also a breakthrough year for agribusiness, which accounted for 8 percent of total Chinese investment in the country, up from 3 percent in 2015.
Investment concentrated in areas of agribusiness such as the dairy, meat, seafood and wine sectors, according to the report.
Major investment deals included S. Kidman & Co selling to a joint venture between Hancock Prospecting and Shanghai CRED Real Estate, the acquisition of Van Dieman’s Land by Moon Lake, and the 79 percent stake in Burra Foods taken by a consortium led by Inner Mongolia Fuyuan Farming, according to the report.
As China’s middle class continues to expand, Chinese investment in Australia’s agribusiness sector is driven by their fast- growing demand for premium quality food, Zhang said. “China has mature transportation technology to bring Australia’s food back to the country.”