Biz Updates: Canberra risks housing market
Chinese investments decline amid confrontations
Australia’s real estate sector is expected to experience a continued drop in investment from China as bilateral ties plunge to their worst level in decades, after media reports on Chinese investors pulling out of a $58.5 million Sydney property deal after facing an extraordinarily long review time from Australia’s foreign investment review panel.
An eight-month-long investment review process, two months longer than stipulated, by the Australian Foreign Investment Review Board (FIRB) has caused a group of Chinese investors to ditch a $58.5 million bid to buy a Sydney office tower, the South China Morning Post reported on Thursday.
The action by FIRB has faced complaints in Australia, with those from the real estate industry raising doubt on the government’s tightened scrutiny on purely commercial projects that have no security concerns.
Chinese experts following bilateral trade and investment relations between China and Australia noted that the incident will harm the growth of the Australian real estate sector, which had entered a period of prosperity with the active participation of Chinese investors since 2013.
Song Wei, associate research fellow at the Chinese Academy of International Trade and Economic Cooperation, said on Friday that some Australian politicians have been closely following the US’ containment strategy against China in a wide range of issues that had harmed China’s core interests.
“The recent groundless delay tactic that killed off a major real estate investment bid would no doubt deter Chinese buyers’ passion for investing in Australia, and this in time will cause a severe blow to the Australian housing market,” Song said.
Zhang Jiayuan, a partner at Beijing-based Ransenhuizhi Investment Fund Management Co, said that she expected the current situation of slowing and declining Chinese investment into the Australian real estate sector will last for the next two to three years, due to the physical inconvenience imposed by the pandemic and the changing economic situation.
In recent years, Australia has tightened rules for investment into its housing sector.
There are also more restrictions in transferring foreign exchange outside China by investors for projects like real estate, as such investment is not encouraged by the Chinese government, an industry insider familiar with real estate transactions told the Global Times on Friday.
“The number of Chinese developers and buyers in Australia’s real estate market has reduced a lot, but rigid demand for immigration remains unchanged,” Huang Kun, owner of Melbourne-based building company Energent Pty Ltd, said.
Real estate transactions in Australia have almost frozen because of the COVID-19 outbreak, Huang said, noting that there is a rebounding trend but signs are not so apparent.
Experts said Australia is politicizing and demonizing Chinese investment in Australia, making investment subject to geopolitical struggles.