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As Australia stays a safe haven for investors, SA further increases links with China

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Written by Stefan Kostarelis

Foreign investment, particularly from China, has been flowing in over the last few years, and it is a trend that looks set to continue.

Elysia Tse, head of research and strategy Asia-Pacific at LaSalle told The Sydney Morning Herald that the group has a positive outlook for Asia-Pacific real estate markets, including Australia.

This outlook is driven by the demand for high-quality and stable markets as investors hope to protect themselves from volatility in other countries.

Over the last quarter century, Australia has demonstrated the kind of economic resilience that puts investors at ease.

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The nation is now officially in its 26th year of consecutive annual economic growth, and the world’s 13th largest economy.

According to the latest figures from Austrade, the Australian economy is rated “Triple A” by all three global rating agencies and is forecast to realise average annual GDP growth of 2.9 percent over the next five years. That’s the highest among major advanced economies.

When it comes to foreign investment in the Asia-Pacific region, China is unsurprisingly the major player.

In 2014-2015, the Foreign Investment Review Board’s Annual Report found that Chinese investors has spent around $25 billion on commercial and residential properties in Australia.

In a previous post, I mentioned that South Australia has yet to receive a significant share of that investment, since Chinese buyers have been more focused in Melbourne and Sydney.

However, several factors suggest that this may change soon.

First, thanks to China Southern Airlines, we now have thrice-weekly direct flights between Guangzhuo and Adelaide, cutting travel times and making South Australia more appealing.

Second, with the supply shortages and skyrocketing prices in Melbourne and Sydney, Chinese buyers have begun to look elsewhere in Australia for investment opportunities.

Data from Juwai, China’s biggest real estate site, has Adelaide as the fourth most viewed city, behind Brisbane and ahead of Perth.

Third, is news that Adelaide’s first Chinese Consulate-General office will be set up in Joslin this year.

The Advertiser reports the Chinese consul-general bought the 5600sq metre site – estimated to be worth around $5 million – for the purpose of building offices and accommodation.

Jun Huai, sales director of an SA Chinese marketing agency, told The Advertiser that the opening of the permanent consulate would attract more Chinese investment to SA.

He added,“We will have a direct connection and direct contact with the Chinese [economy]… All this happening is going to help South Australian connections and exports to China and that’s the reason China have set up this consulate in Adelaide.”

“There’s a trend that some Chinese investors are coming to South Australia, not just to Melbourne or Sydney.”

Huai also noted that the temporary consulate that was set up in Findon in January of last year was already having a positive effect on Chinese investment in the state.

The combination of increased transportation links, higher prices in Melbourne and Sydney and local governmental assistance will no doubt lead to greater numbers of Chinese choosing SA as a place to invest in property.