Chinese property investors in Australia more cautious amid share market crash

The Chinese share market rout is making Chinese investors more cautious and a small number will have to sell their properties in Australia because of share market losses, real estate agents say.

Chinese shares have fallen by 30 per cent over the past few weeks, wiping trillions of dollars off the value of markets.

Michael Pallier, principal at Sydney Sothebys International Realty, said some young investors had been caught out in the share market rout.

He said one of his clients who bought a new apartment in Sydney had lost money on the Chinese share market.

“She was young, she hadn’t seen a share market crash before, she was hoping the price would continue to go up of the shares and she made a poor judgement call and she now as a result of that is in some trouble,” Mr Pallier said.

“There will be some people who have to sell properties but I don’t think very many.”

Dominic Ong, the senior director for Asian Markets at property group Knight Frank, agreed that in a small number of cases Chinese investors in Australia would have to sell their properties.

“That is a possibility but to a very, very limited number of investors,” he said.

“I don’t think that will happen.”

Chinese investors prefer to have property than cash, shares

Mr Pallier said the share market volatility in China was prompting more Chinese interest in local properties at the luxury end of the market.

“Last month in our office we sold 20 properties for $115 million turnover in June, of which 25 per cent were sold to Chinese buyers, so we do have a lot of experience dealing with Chinese markets,” he said.

He said some of his wealthy Chinese clients moved money out of the Chinese share market before it started falling.

“A lot of people that we deal with have already taken their money out of the stock market and … because the Australian dollar has dropped … [they are taking] the money out of China over to Sydney,” Mr Pallier told PM.

“They’d rather put the money into a property than put it into cash or into shares.”

Mr Pallier said he had one Chinese client with $10 million to spend and another who had shown interest in a $13.8 million house in inner-city Sydney.

But Mr Ong said Chinese property investors in Australia had become more cautious.

“I haven’t seen in this particular case where the share market correction caused more investment into Australia,” Mr Ong told The World Today in an interview.

“Now, what I have been observing and noticed is these investors have become more cautious on buying property.”

Under recent changes to the foreign investment laws, non-residents can buy new homes but not established dwellings with approval from the Foreign Investment Review Board (FIRB).

Temporary foreign residents can buy one established home with FIRB approval.

Foreign investors face fines and jail terms if they break the law.

Source: ABC News

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