Demographics

China is host to the world’s largest middle class with over 190,000,000 individuals with household wealth between US$50,000 to US$500,000. China also accounts for 10% of all global wealth.

Chinese cultural & societal influences, as well as regulations around the retirement age have influenced attitudes towards the savings rate. The Chinese personal savings rate is typically around 30%, as they anticipate that government pensions will be inadequate in their later years.

Household investment is currently 8% of personal wealth, with an estimated potential total middle-class investment market value between U$148 billion, to US$1.4 trillion.

Chinese Attitudes Towards Real Estate

It is a widely acknowledged fact that property ownership in China is forbidden, instead property land rights are granted through leases, with residential leases being for a maximum 70 years, with Government reserving the right to reclaim any land leased to an individual at any time.

Savings invested in a bank savings account also significant risk should an individual fall foul of the law, with frozen or confiscated funds a common punishment, so wealthy individuals often look for other liquid assets to invest their surplus funds as a contingency.

Worldwide, real estate is acknowledged as a safe, reasonably liquid investment with good returns, and Chinese buyers will often look to place surplus funds into Australian real estate to diversify their portfolio of liquid assets.

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The Investment Landscape

In 2014 – 2015 the Foreign Investment Review Board approved 25,431 applications to Chinese investors purchasing from overseas, with a total value of $26,843,000,000 ($26.843 Billion), representing around 6% of all Australian residential property transactions.

Since 2010, regulators have sought to tighten regulations around sale of Australian land to overseas buyers, with restrictions on the type of properties and the value of individual transactions that foreign buyers can undertake.

Despite these increasing regulations, approvals of Chinese investment have increased 40% since 2013, the largest growth in investment from any country in Australian property. The value of foreign owned property by Chinese buyers is estimated to be around $175 Billion.

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