Chinese Money into RE

The issue is that it would not add to the supply. That's the basic gist of requiring foreigners to buy new.

 

Right. But not adding to supply would be positive for prices and therefore good for investors, right?

So as an investors I would prefer having foreigners able to buy both existing and new property. Less supply and more demand = higher prices.

 

The issue is existing stock should be prioritised for people here. But hey I'm not complaining, some of my places have doubled in few years thanks to them. The last three properties I sold in 2015 and 2016 were to Chinese hehehe, out Bidded the locals.

 

Neither would I, its a doggy dog world as they say.

 

Sydney, Vancouver, Auckland nothing to do with Chinese money

 

Agreed. Think about how to help people and they kick you in the face.

 

Oh nah the Chinese hate Vancouver.

 

Ok got it. Well where we differ is that I don't think existing stock should be prioritised for "people who leave here". I believe that assets I own I should be able to sell to any person, any race, any culture, any nationality etc.

 

couple of things to note

mainstream media has to realize it is not a pure investment play when it comes to Chinese money as much has been said about vacancies and apartments in darkness every night - would argue that the main motivation here is not to invest/speculate but as a means to transfer their hard earned capital to a more stable environment - imagine you own a 65sqm 3bdr apartment in one of the tier 1 cities worth approx AUD$1m, your asset in this case is tied to an extremely volatile investment class in an environment of greater govt oversight and monitoring , you have the option of moving your capital from this environment to a more stable one politically, socially and economically where asset classes cannot be driven up and down in a schizophrenic manner - not to mention purchasing a new build with a bigger floor plan than what you had before - as a capital preservation strategy why wouldn't you move funds into this option?

secondly there has been a huge influx of international students and immigrants of Chinese origins who have obtained citizenship in the last decade or so who have the funds and motivation to purchase existing stock as a base in predominantly Sydney or Melbourne. Hence it made sense for their families to help them out with the purchase (especially as the one child generation have grown up) - I don't think this aspect has been covered much in the media

it was previously relatively straightforward to move funds out of China however with the new clampdown on foreign transfers and an increased spotlight in this arena it definitely would be interesting to see how this translates in the market moving forward

 

They buy existing houses too

 

Also about creating jobs and stimulating local business (although note so much of modern apartments is prefabricated bits from China)

 

They're not allowed to. Those are Australians. Having Chinese skin, that's all.

 

they can, if they redevelop (but lets face it, an individual coming from China to buy in Aus is more likely to get something off the plan/new build)

I believe within 4 years and have DA papers to prove it.

 

Not quite correct. To be more accurate, they are not allowed to if, as a non resident, they don't have FIRB approval, or if not from new developed houses where the developer has not FIRB approval.

 

recently attended a big4 lunar new year event - amongst our table were an immigrant agent, accountant and 3 brokers - immigrant agent's business is booming, accountant's business is booming, brokers business still doing OK but definitely not as rampant as before, they mention couple of 3rd tiers (e.g. la trobe) still funding for non-residents and money still relatively OK to be moved offshore despite recent changes, interesting to note

 

Agreed.

One comment however. In many instances there is no actual money “moving offshore”. A substantial chunk of the foreign currency generated by lawful trade never comes back to China and is kept abroad. It’s then loaned to whoever in their circles that need the cash.

I don’t know whether the usual statistics about capital outflow account for this practice. If not, there’s a big black hole there.

According to the BBC article below the biggest families in China including those close to their top leaders routinely hold offshore accounts/companies/partnerships to conceal their money. If their most powerful people are doing it what chance is there for it to be stopped?

Panama Papers: How China's wealth is sneaked abroad - BBC News

 

nice nice - think the main fear is a random tap on the shoulder at 3am in the morning, yes everyone is doing it but you just dont know when you are to be made an example of or whether you stepped on the wrong toe

seems like private lending is the big go-to space now, some funds charge 20-25%, been seeing quite a few individuals pooling together and getting onto this lucrative space more and more! in addition its deemed much more "safer" to operate here as opposed to China as there is physical collateral (the property) against the loan

 

Well observed.

People are extra careful now, not so much because rules are tighter but because there are more random reasons to be worried about. Things have slowed down a bit but still happening on a large scale I believe.

The 20-25% rate is a measure of the value that people place in having their money out of China (not unlike the steep premium you pay when changing money on the black market) however it is the desperation of it all that says heaps about their motivation i.e. it can't be explained by economic factors alone.

If the big 4 were smarter they could have continued lending money but at super high rates (a sort of low doc loans considering that some docs are fake anyway). Now all this has been driven further underground and God knows what’s happening.

 

If the big 4 were smarter they could have continued lending money but at super high rates (a sort of low doc loans considering that some docs are fake anyway). Now all this has been driven further underground and God knows what’s happening.[/QUOTE]

the banks are used as political leverage these days! funny how foreign income has been used in apps for years and then suddenly the tap was turned off overnight - incidentally there was a report which came out that stated delinquencies are of a lower percentage with non-residents compared with locals

 

@Hwangers thanks for your insights. You mentioned La Trobe was mentioned as one of the tier #2/3 lenders still lending to non-resident borrowers.

Are you able to name any other lenders like this that were mentioned as still lending to non-residents?