No divestiture orders as Chinese buyers top the 12,025 foreign investors: FIRB

Monday, 03 March 2014

Chinese investors were the largest source of foreign investment in Australian property in the 2012-13 financial year, according to the latest figures from the Foreign Investment Review Board (FIRB).

The FIRB's annual report reveals $5.9 billion of purchases came from China, a 44% annual increase that enabled it to eclipse Canada's $4.9 billion and the USA at $4.4 billion.

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However total foreign investment in Australian real estate actually fell over the recent years from $59.1 billion to $51.9 billion.

It accompanied an overall decrease in the value of total foreign investment which fell to $135.7 billion from $170.7 billion seemingly as a consequence of the turning of the mining and resources construction boom.

The Foreign Investment Review Board gave approval to 11,668 purchases of Australian residential properties by foreigners last financial year, up 19% on the previous year.

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According to FIRB’s annual report released last Friday, a total of $17 billion in foreign cash was injected into Australian residential last financial year.

A further $35 billion into commercial real estate took the total to 12,025 foreign purchases.

Of these, 4,573 were in Victoria, 3,580 were in New South Wales, 1,734 in Queensland, 1,267 in Western Australia and 567 in South Australia.

Some 10,458 of the approvals were for property sold at $1 million or less.

Then 1793 approvals between $1 million and $50 million.

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There were 396 approvals at $50 million and higher, which while there is never any official paperwork from the highly secretive FIRB, would include just the one residential house purchase, the Point Piper harbourfront, Altona which sold at $52 million, but perhaps not the beacon it's made out to be.

No divestiture orders were made, continuing the trend set in 2010-2011 and 2011-2012. I am aware that there had been earlier orders where the buyers failed to undertake its development undertakings.

Temporary residents allowed to buy one property to live in numbered 5,091 last financial year.

A further 4499 approvals were granted for foreign individuals to purchase a new dwelling.

There were 50 approvals for developers seeking to sell up to 100 percent of their off the plan developments to foreigners.

The chief economist at HSBC Australia, Paul Bloxham, told News Ltd papers the increase in foreign buyers was contributing to house price pain.

But he quickly acknowledged the biggest factor driving up house prices had been lower interest rates.

"But it’s certainly a contributing factor,” he said.

“In certain market segments you’re certainly seeing an impact. Off the plan apartments are likely to be an area where prices are being more driven by foreign buyers.”

While growing in number, foreign purchases only represented about two or three per cent of total housing turnover, according to Mr Bloxham.

A recent survey by HSBC Bank of affluent Asians across seven countries in the region, including mainland China, found Australia was among their top investment destinations, but that the Chinese did not actually top the intended buyers list.

news@propertyobserver.com.au