Written by Stefan Kostraellis
On December 13, China Southern Airlines began thrice-weekly direct flights between Guangzhou and Adelaide.
While the first thought for many would be the impact on tourism, the link with China may also prove valuable to other industries, including real estate.
Australia China Business Council (SA) president Sean Keenihan told The Advertiser “a trip to SA is Chinese visitor’s shop window to high end food purchases, property investment, education and migration opportunities”.
He also estimated that the minimum benefit to the SA economy of each return flight would be an average of $1 million, totaling $150 million a year spread over a range of industries.
It’s no secret that the Chinese have been buying up big in Australia over the last few years.
According to the Foreign Investment Review Board’s annual report, Chinese foreign investors had over 25,000 applications approved in 2014-2015.
These approvals included $25 billion worth of purchases of Australian property (commercial and residential), and a further $2.5 billion of agricultural investments.
Under 15,000 approvals were granted in 2012-2013, with that number skyrocketing to just under 25,000 in 2013-2014.
As of today, official data for 2015-2016 is still unavailable, but the general trend is definitely up.
In addition, numbers from the Australian Bureau of Statistics show that Chinese direct investment has grown 40%, the largest growth from any country.
While Chinese money has been flowing into Australian property, unfortunately SA has yet to receive its fair share of the pie.
Last year, KPMG and Sydney University released a joint report called Demystifying Chinese Investment in Australia. The report found that real estate made up almost half of Chinese investments, and that SA was attracting just 3% of the total Chinese spend.
Direct flights may help in and around Chinese New Year, as a fresh surge of Chinese visitors start to look at SA as viable option for investment.
David Chatterjee, director of Lucror Property told the Domain Group “2017 is looking quite promising…Australia was always the second preference as a buying destination behind the US but now, since Trump, Australia has become No.1.”
With the property boom slowing down in Melbourne and increasingly prohibitive prices in Sydney, there are already reports that Chinese buyers have begun to turn to Perth as a more affordable option.
And data from Juwai, China’s biggest international real estate website, placed Adelaide in 4th in the top Australian Cities viewed by Chinese buyers, behind Melbourne, Sydney and Brisbane.
All things considered, it’s very likely that the combination of direct flights and better prices can bring more Chinese dollars to SA real estate in the near future.
In my next post, I’ll take an in-depth look at the negotiation style of the Chinese and how you can do better if you get them to the table.
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