Chinese investment in residential housing slowing: FIRB adviser

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Inward Chinese investment in Australian residential real estate has started to slow but interest in the purchase of agricultural ­businesses and farms shows little sign of abating, according to the Foreign Investment Review Board’s chief government adviser.

Adam McKissack, principal foreign investment adviser in the Treasury department, told an Australia China Business Council lunch yesterday in Melbourne that there were early signs of a new wave of Chinese investment.

Mr McKissack said the growth areas being targeted by Chinese investors in Australia had been identified by FIRB as the renewable energy, health care and hi-tech sectors, and agriculture.

The Treasury official said this swing was partly fuelled by recent regulatory changes imposed by Chinese authorities, who have ­labelled outward investment by Chinese citizens and companies in international hotels, entertainment, property development, residential real estate and tourism ventures as “not favoured.”

Investment in gambling ­projects and casinos is now prohibited, while investment overseas in agriculture, renewable energy, health care and the R&D technology sector are the new Chinese government favourites.

“While the biggest foreign investor in Australia is the United States, the greatest number of ­foreign investment approval ­[applications] is from China, mainly in real estate,” Mr McKissack said yesterday. “There was an explosion of ­interest last year in residential real estate — 75 per cent from Chinese investors and 40,000 [FIRB] ­approvals — but we think [that ­interest] has peaked and is coming off the boil now.”

Mr McKissack said the three areas of foreign investment of most interest to FIRB remained agriculture, residential real estate and critical infrastructure, both because of national security issues and public policy sensitivity.

As foreign interest grows, ­particularly from China, in buying key infrastructure assets in ­Australia such as electricity ­companies, gas pipelines and ports, the government is currently in the throes of establishing a new Critical Infrastructure Centre to better assess the ­economic and national security risks of selling of such state assets.

Mr McKissack said the CIC would assess and identify all major infrastructure assets in Australia — local, state and ­foreign owned — ahead of any ­future sale or FIRB applications being made, so it is better armed with a list of critical assets that may be banned from sale before the event. The focus will be on critical telecommunication, ports, electricity and water assets.

On the sensitive issue of ­foreign-owned farms, Mr McKissack believes the first release of ­foreign farmland register figures last year showing just 13.5 per cent of agricultural land in Australia is in the hands of foreigners had quelled alarmist fears.

But he admitted FIRB was working to give more depth to the farm land register, which does not identify actual foreign owners or the locations, or detail how many farms are owned by any one ­foreign business or overseas ­governments.

“We are looking if we can go further than just [publishing ­figures] on a state level about ­foreign ownership; so we could perhaps look at the overall level of ownership in a specific region,” Mr McKissack said.

“We also need to understand the extent of cumulative holdings [held by any one foreign investor across Australia], which we can’t do at the moment.”

Minter Ellison foreign investment specialist Marcus Best said $58 billion of investment had flowed into Australia from China last year, aided by the China ­Australia Free Trade agreement and some recent simplifications of FIRB rules and fees.

By SUE NEALES
The Australian

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