NICK Johnstone is a man on a mission. Next week, the Brighton estate agent will fly to Shanghai with the aim of selling 30 of Melbourne’s most expensive homes to Chinese buyers.
It will be the first time a Melbourne agency has attended the China International Luxury Property Show, but it is just one example of a phenomenon that has transformed Australia’s residential market.
”Australia is the flavour of the month amongst the Chinese investors,” Mr Johnstone, 41, said yesterday. ”They love property and there’s plenty of money over there so they’re good clients to have.”
While Chinese buyers have fuelled the top-end real estate revival, they are also courting controversy, with some local house hunters complaining they are being priced out by foreigners who have no intention of living in their new properties.
A few critics go further, arguing Chinese money is now putting upwards pressure on interest rates.
But you will not catch Mr Johnstone of J. P. Dixon complaining. He has made at least 40 per cent of sales this year to the Chinese. Other agents in the east and south-eastern suburbs have reported the same level of demand.
”We’ve had several buy properties sight unseen, just over the internet and phone.” Mr Johnstone said. ”A lady from Shanghai, whose son goes to Wesley College, bought four houses in Brighton from us in two months, worth $20 million.
”They buy them to land bank, not to rent them out. The houses just sit vacant because they are after the capital growth.”
The floodgates opened on foreign investment in March when the Federal Government relaxed its rules on property ownership.
The changes made it easier for foreign companies and temporary residents, such as 12-month business visa holders, foreign students, and their parents, to invest.
Last month, Treasurer Wayne Swan announced a further relaxation of Australia’s foreign investment screening to ”help boost Australia’s growth”.
But the big spend-up is being fuelled by more than just Australian policy change.
Armadale entrepreneur Barry Jan, who runs property shopping tours from China to Australia, said the Communist Party had had an about-face on citizens investing their wealth overseas. ”People are investing now in case they can’t get their money out later,” he said.
Kew property adviser Monique Wakelin said many Chinese had come to see Australian property as a stable hedge against global economic tumult and the potential devaluation of the yuan.
”They are looking for avenues to protect at least part of their wealth, and A-grade Melbourne residential property fits the bill.” The confluence of events has seen Chinese money inflating prices for top-end homes by at least 10 per cent in a matter of months, according to Boroondara agent James Connell from Marshall White.
”Chinese people have effectively kick-started our economy and underpinned all our housing values in inner Melbourne,” he said.
Keen to cash in on the boom, Marshall White, J. P. Dixon and other big agencies such as Jellis Craig are hastily establishing connections with offshore accounts, lawyers and businessmen to funnel a stream of buyers into Melbourne.
Also in hot demand are Mandarin-speaking Melbourne real estate agents and property lawyers.
Meanwhile, Australia’s largest developers – including Australand, Central Equity, Simonds, Becton – are setting up offices in China and Hong Kong to spruik off-the-plan developments.
And an industry of ”Australian property and migration” exhibitions has burgeoned in the cities and mining towns, such as Taiyuan, attracting hundreds of people.
Yet all the evidence put forward about the property revolution is so far anecdotal because there is no measure being kept on the amount of investment by temporary residents in residential property.
The Government’s March law change abolished mandatory reporting of such acquisitions in a bid to ”enhance flexibility in the market”.
What is certain is that in the past financial year before the change, foreign investment in Australian residential property increased by a third to $20.4 billion from the year before. Victoria attracted 21 per cent of that investment, according to the Foreign Investment Review Board’s annual report released last month.