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Local Chinese buyers put $500 million into Vic assets

Property Markets / Transactions

Australia / Melbourne

Jul 10 2018

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Local Chinese buyers are becoming a significant force within Victoria’s commercial property market as they move to fill the gap left by their off-shore compatriots with more than $500 million in purchases over the last 18 months according to a CBRE market analysis.
 
Data from CBRE’s Asian Service Desk Analyst in Melbourne, Philip Chen, shows local buyers accounted for 17.5 per cent or $518.8 million of the $2.957 billion in total purchases (through CBRE) over the last 18 months with off-shore Chinese purchases just above half of that at $277.3 million.
 
Asians buyers, both local and off-shore, accounted for nearly half (47.5%) of all sales 
with buyers from Malaysia ($286m), Hong Kong ($139m) and Singapore ($111m)  prominent, while Vietnam, South Korea, Macau, Taiwan and Cambodia were represented too.
 
Local Chinese buyers were by far the most active of all Asian groups with nearly 50 per cent or 48 of 97 completed transactions.  
 
CBRE National Director Investments, Mark Wizel, said the data had not surprised  given the spike in enquiry from local Chinese buyers especially in recent times with five purchases totaling $211 million* since April.
 
``Astute local Chinese players have recognised a real opportunity to enter the market in the absence of off-shore Chinese buyers. Our Chinatown office, which has just celebrated one year in operation, has been inundated with enquiry this year, the great bulk of that being from local Chinese parties including some first time investors.
 
``Broadly they include Melbourne- based Chinese individuals, Chinese families, Chinese syndicates and Chinese developers – the latter who have moved into income producing assets such as shopping centres and office buildings – while syndicates have been formed with the single purpose of taking advantage of the decline in off-shore investors.”
 
He said the investment opportunity which had opened up to locals had also driven Chinese families in Melbourne into pooling their funds to enable purchases of larger, $30 million plus, assets.
 
``This is very similar to the very successful groupings strategy we have seen over several decades in Victoria involving local Italian, Jewish and Greek families, but given the size of Melbourne’s Chinese community it would not surprise to see this latest variant trump them all,’’ Mr Wizel said. 
 
Investments CBRE Jan 2017- June 2018:
 
Buyer Type Spend Percentage # of Deals
Local Chinese $518.8m 17.5 48
Local Asian $381.5m 12.9 14

Off-shore Chinese
$277.3m 9.3 27

Off-shore Asian 
$228.2m 7.7 8
Total  $1.406b 47.55 97
Local non-Asian buyers $1.551b 52.45 153
Total $2.957b 100 250
 
National Director Asian Services, Lewis Tong, said significant elements in the latest round of local Chinese purchases had involved retail assets - $253 million - and buyers who had hitherto been focussed on development sites.
 
``In 2009, 85 per cent of assets sold to Asian buyers, predominantly Chinese (local and off-shore) were development sites with the remaining 15 per cent being income producing properties. In 2017, the percentage of income producing properties had risen to 72 per cent and in 2018 we are seeing that trend continue with the likelihood it will increase further.
 
``That is of course partially due to a loss of confidence in the residential market but it is also a reflection of a more mature appreciation of the overall investment market and the longer term benefits flowing from the potential development upside available with well-located retail assets. 
 
``Of the six shopping centres we have sold since April, three have been purchased by local Chinese buyers while that cohort was in the final mix in the sale of the other three. Developers were again prominent in those numbers with the lure of significant underlying land value and development potential key factors,’’ Mr Tong said.
 
He said buyers had also been prepared to look outside of Melbourne with the purchase of Horsham Gateway Shopping Centre in November for $14.55 million, while local Chinese had also been involved in office property deals including 601 Bourke Street ($70m) and 454 Collins Street ($40m).
 
Local Chinese buyer purchases in 2018 through CBRE
 
Property $million Sale
Mornington Village SC $39.38 May
601 Bourke Street $70 May
454 Collins Street $40 April
Maroondah Village SC $18.8 May $18.8 May
Highlands SC $43 April
Total  $211.18  $211.18   
 
Mr Chen said local Chinese buyers had also splashed out more than $90 million on development sites ($91.9) and on medical related properties ($91.5m).

Off-shore Chinese  $277.3m 9.3 27

 

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