Developers still going to China, but demand down 40pc


The founder of Australia’s biggest off-the-plan marketing website says the claim that local developers have abandoned the Chinese market due to a lack of appetite is completely untrue.

“The idea that the market in China for Australian projects is over is not just an exaggeration, it’s just plain wrong,” said Jon Ellis, managing director of selling platform Investorist, which connects developers with selling agents and currently lists about 215 mainly East Coast projects.

He was responding to a claim reported in The Australian Financial Review by Scott Kirchner, a Shanghai-based director of real estate group Beller, that Australian developers were not up in China pushing projects and that “Chinese agents have no appetite for Australian property”.

While Mr Ellis conceded that demand from China was down about 40 per cent on a year ago, developers were still going to China to promote their developments and achieving sales.

“We recently achieved 24 sales for a Melbourne Docklands developer. If you have a decent product and are willing to persevere and have a sustained presence in China you will continue to make sales and heaps of them.”

Mr Ellis said he would be taking six Australian developers, including ASX heavyweight Mirvac and real estate agents McGrath, to Investorist’s next China Connection roadshow, which starts on Sunday, having taken five to the last event.

He likened the roadshow, which takes in the cities of Guangzhou, Shenzhen and Shanghai, to “speed dating” where developers pitch the projects to Chinese estate agents.

“We do these roadshows based on demand from Chinese estate agents,” said Mr Ellis. “There is still the same level of demand. We have sold out each of our events within three weeks.”

Strong interest remains

He added that at educational seminars held in China, Investorist hosted representatives from 160 companies selling international property, and about 40 per cent expressed strong interest in continuing to buy Australian properties.

“A similar story emerges from our regular China Connection events; approximately half of the Chinese agents attending are there to meet Australian developers. The Chinese agents are attending because Australian property is what their clients are asking for,” he said.

While demand from China was down,  he said some of this shortfall had been taken up by increasing demand from local selling agents and channels.

“Across the board demand for off-the-plan properties is down about 25 to 30 per cent,” he said. This he put down to recent changes to stamp duty rules including removal of concessions to investors buying off the plan in Victoria and changes to bank’s lending policies, including the tightening up of lending to investors.

Mr Ellis said many investors were paying for the purchases entirely with cash with more than 80 per cent having the capacity to do so if they can’t get bank funding.

“Naturally if loans are not available here, this affects our competitiveness globally, but many Chinese share my view that Australia is the best country in the word to live in,” he said.

Recent restrictions placed by the Chinese government on “irrational” overseas investments in real estate and entertainment assets could make it tougher for Chinese buyers, but Mr Ellis said over August demand across its platform increased.

Investorist facilitates between 200 and 300 apartment sales a month through its platform with about a quarter of those sales to offshore buyers and the rest local-based groups.

by Larry Schlesinger
Financial Review


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