Looking into Australia’s real estate market future
Extremely wealthy Chinese are expected to park their funds in Australia and similar regions as concerns about economic volatility continue to rise.
According to Investorlink Residency managing director Natasha Wood (via Sydney Morning Herald), Chinese investors will be injecting more investments overseas including Australia although the Chinese government has already tightened regulations on offshore spending.
“Because the property market has stalled in China, for example, they’ve decided ‘we want to go overseas.” Wood said.
“They’re very cautious, but I don’t think it’s slowed down in terms of interests in Australia and expressions of interests [for SIVs],” she said.
Thanks to the Australian government’s Significant Investor Visa or SIV, Chinese investor interest remains high over the Australian market. Further, the SIV program also permits high net worth Chinese investors keen on residing in Australia to invest directly in the region. For interested parties, they need to invest at least $5 million within four years. An investment portfolio should include venture capital and growth private equity funds. There should also be a minimum of $1.5 million investment in emerging companies.
Further, Wood also noted that Chinese investors see real estate as their main priority. Venture capital follows. However, not everyone agrees about the future of the Australian real estate market in relation to Chinese investments. The International Monetary Fund argues that Australia can be one of the most affected – worst hit – if China’s economy continues to slow down. According to economists, the world may see a global economic growth stall in 2016 if China’s economic problem continues. Some are also predicting a potential recession.
Nonetheless, that remains debatable until conditions progress or remains. Although Chinese investments in Australia took a dive at 10 percent accounting for around US$8.3 in 2014, the country remains somewhat competitive to the US economy. The latter saw direct investment fell 14 percent accounting for around $12 billion.
A lot of interesting views here. What do you think?
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