Fears government restrictions will stop flow of Chinese money to Brisbane, Gold Coast development


THE great wall of money from mainland China arriving in Queensland will continue but there are concerns cracks are appearing.

Over the past few years mainland Chinese investors and developers have spent billions on residential and commercial property in Queensland with Gold Coast and Brisbane the main focus.

But there are fears that government restrictions will dampen investment in Queensland.

Chinese property portal Juwai.com said that, since the September quarter last year, buyers’ inquiries for Queensland property had fallen by 75 per cent.

But Juwai.com head of Australia Jane Lu said while Chinese investment would be down this year she expected it would still be one of the top two or three years recorded.

“By current trends, Chinese buying in Queensland this year will be in the range of what we saw in 2015. That’s currently the second biggest year in history,” she said.

According to the Foreign Investment Review Board annual report 2015-16, Chinese investment in residential and commercial property in Australia reached $31.9 billion, of which Queensland has a fair chunk, up from $24.4 billion the year before.

The reason, according to Colliers International director for Investment Services Qld Sam Biggins, is that they see Australia as a stable and transparent political haven.

“The saying in China is never bet against the government,” he said.

“There’s that feeling that if I wake up tomorrow everything might be gone so I have to find a stable and safe haven.”

However, there are fears that stability and transparency are no more.

At the start of the year Chinese Government capital controls made it difficult for mainland developers and small and larger investors to get money out. The Australian Government also unveiled a new foreign resident capital gains withholding payment of 12.5 per cent for properties valued at more than $750,000, unless exempted.

This year the Queensland Government unveiled a 1.5 per cent surcharge on non-resident land taxpayers. While Australian banks now have funding restrictions on foreign lending.

There is also the blowback created when developments are knocked back. In one of the latest incidents, Chinese-backed ASF Group accused the State Government of “political games” and was seeking legal advice after its $3 billion casino resort on the Gold Coast was quashed last week.

Concern about the long-term viability of projects also created a small firestorm over the $900 million Jewel apartment/hotel project on the Gold Coast, which some media reports claimed was on the market.

Those behind the Dalian Wanda/Ridong Group development quickly quashed speculation over their commitment to the long-term project, which had its start eight years ago when Ridong chairman Riyu Li bought the 1.13ha beachfront site.

But frustrations over government policy towards Chinese investment is building.

Ms Lu said Chinese investors still wanted to invest in Queensland property.

“But they worry about the attitude of the Australian and Queensland governments. I don’t think any buyer wants to run the risk of investing and then have new legislation come out that costs them a lot of money,” she said.

“Unfortunately, both the Federal and Queensland governments have acted erratically in announcing new taxes and restrictions on foreign buyers.

“Queensland has lost some credibility with foreign buyers by telling the market it would not impose a tax and then going back on its word. It would have been wiser to communicate its intentions more honestly.

“Some Chinese buyers consider the state risky. They’re willing to sit on the fence for a while to see what happens next.”

Mr Biggins described the governments’ actions as “unhelpful” but believed Queensland remained firmly on Chinese investment radars. “I’ve been to mainland China four times over the past 12 months. That’s against a backdrop of a lot of discussions of tightened capital controls preventing people from transferring money out,” he said.

“What we’re saying is that a lot of the developers coming here have Hong Kong-listed cash boxes, or rather a listed entity. So these companies don’t have a problem acquiring property here with capital transfers.”

Mr Biggins said the interest level in Australia and Queensland was growing.

“In those last four trips we saw groups who two years ago said that they may be coming here and 12 months ago they will come here and now they have staff who’ve been down and had a look,” he said.

“The interest is there. We have not seen transactions die off but we have had a couple of isolated instances where transactions by individuals who didn’t have that corporate structure outside of China fell through because they couldn’t transfer money.

“But, by and large, interest is still very strong and growing. One of the key catalysts in our market is the Queen’s Wharf Casino project. That change of mindset is profound. Brand awareness of our market is definitely growing,” he said.

By Chris Herde
The Courier-Mail


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