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Australia's two biggest cities soaking up foreign dollars

by Staff Reporter9 minute read
The Adviser

New research has found a staggering increase in the volume of real estate purchases by overseas-based Chinese buyers.

Global property group Knight Frank found that Chinese outward real estate investment grew from US$0.6 billion in 2009 to US$12 billion in 2013.

Focusing on three key markets – the US, UK and Australia – the report found that Chinese real estate investment volume in Sydney and Melbourne was almost comparable to that of London and New York in 2014.

The report also noted that the free trade agreement signed between Australia and China in November will accelerate the flow of Chinese investment funds into the Australian property market.

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Neil Brookes, head of capital markets for Asia Pacific at Knight Frank, said investors today are shifting their focus towards sustainable, long-term returns.

"The key factors for Chinese investors are the policy push from the Chinese government to diversify into other countries; a softening domestic market; and the pull from higher returns achievable in overseas markets," Mr Brookes said.

"Australia, the US and the UK are the top three markets most Chinese investors are looking at.

"We saw five times as much capital outflow from China into these three markets in 2013 alone, compared to the previous year," he said.

While capital cities are still favoured by Chinese investors, they are starting to look further afield to provincial towns for better yields, according to Knight Frank's head of research and consultancy for Greater China, David Ji.

 

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