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Six Drivers for International Property Investment in Australia. How Can Your Investment Strategy Benefit?

Six Drivers for International Property Investment in Australia.  How Can Your Investment Strategy Benefit?

Chinese investment in international property is driving huge outflows of capital from China.  In 2025 it is estimated that AUD$220B will be invested internationally.  Juwei.com report the US is the number one destination for Chinese property investment, and that Australia is number two.

Safety is a huge driver for these investors.  What does it mean to them?

Number 1: A neighbourhood with safe streets at night

Chinese investors sending their children overseas to study want to be sure they are safe.  This can be difficult to assess from a distance.  What resources can they use to assess this?

Past crime rates and policing standards could be useful however Wikipedia reports that only 1% of the Chinese population in China speak English.  They can’t access direct research.  This points to the vital role Juwei.com has in educating these investors about their investment.

What else might they do?  It could be to network with others who have children studying overseas at the same University.  This could provide first hand experience of the local conditions.  Is this part of the drive for the Chinese to form large communities around educational hubs or in various suburbs because it is known to be a safe neighbourhood?

Number 2:  Construction Quality

Chinese construction standards and building regulation are varied and the media suggest they have been inconsistently applied.  Juwei.com report that Chinese buildings have an average life of 30 years.  Imagine the uncertainty about maintenance costs for these investments.

In Australia this has driven their choices away from houses with timber as weather boards or frames.  Local Sydney and Melbourne agents have reported that their preference is for solid brick homes.  With apartments it is for larger complexes of apartments with better quality developers and security access.

Number 3:  Food Safety

Implementing food regulation standards in China has been problematic at times.  The melamine contamination of infant formulas was partly responsible for their $2.7B imported milk industry.

Australian standards are seen as more trusted.  Blackmores, the health care supplements company, has had a huge expansion into China.   And our milk is imported for their children to drink.

Number 4:  Land Title Security

Australia has a well structured and secure land titles system that is being adopted in many developing countries.  In China titles are held for 70 years and then revert to the Government.  In a country that is not a democracy this creates considerable uncertainty.  This alone could drive considerable overseas property investment in Australia because the ownership is forever providing a multi generational legacy.

Number 5:  Residential Asset Volatility

Every investor wants to create a nest egg for their future.  They want the value of their asset to be constant or increasing.  Property in Australia is a less volatile asset than shares.  Our capital growth rates have been extraordinary with the current low cost of finance.

In comparison Chinese indices of property value in the 70 or 100 cities indexes have fluctuated between -15% and plus 40% growth pa.  It is this plus that their property cycles are short with 4 cycles in the last ten years.

Number 6:  Medical Standards

World class medical care is being sort by the aging Chinese population.   This has built a huge market for overseas healthcare that was worth $438.6 billion in 2015, and is expected to grow to $678.5 billion by 2017.  Australia has world class medical standards in its public and private hospitals.

Summary

Chinese investors are seeking safety in their Australian property asset.  Properties that appeal to them need to be solid, have reduced volatility, and be in a safe neighbourhood.  No gentrification projects where a tough local element is displaced over time with young professionals, until it is complete.    Rather they are seeking apartments with young professional appeal and solid brick homes with family appeal.  Great insights to support your investment strategy for increased appeal.