For mainlanders, Sydney is hot property

PUBLISHED : Wednesday, 23 March, 2011, 12:00am
UPDATED : Wednesday, 23 March, 2011, 12:00am

Along with the standard purchases - abalone, sheepskin, macadamia nuts and koala soft toys - deluxe properties have been added to the 'must-have' shopping lists of many mainland travellers to Australia.

Ray Chan Wei, who heads a property agency in Sussex Street in Sydney's Chinatown, said mainlanders had been the biggest overseas buyers in the city since 2005.

'In some new property projects, up to 60 per cent of the buyers were mainland Chinese and about 20 per cent came from Hong Kong,' said Chan (pictured), managing director of Henson Properties, which has operated in the area for 27 years. 'Local Australian buyers represent no more than a small percentage of buyers in certain projects in the area.'

The pattern was very different from the 1980s, he said, when Hongkongers were dominant among overseas buyers, since many migrated to Australia during that period.

'In the 1980s, mainlanders in Sydney were mainly poor students. Up to six to eight students lived together in a small apartment,' he recalled.

Himself a Hong Kong migrant who moved to the southeastern city in 1977, Chan set up Henson Properties in the Chinatown district in 1984.

When the wave of Hong Kong migration slowed in the 90s, Taiwanese and Indonesian migrants and investors took over as the biggest foreign buyers in Sydney, he said. 'But from 2005 onwards, it appears mainlanders have become the biggest overseas buyers. There are frequent group tours that bring mainland tourists here for sight-seeing, dining, shopping - and buying properties.'

The booming mainland economy created a rich class of investors who speculated in Hong Kong stocks and properties, and now some are shifting their attention to Australia. This is evident in Sydney's Chinatown, where property firms display Chinese-language posters. Chan's firm employs fluent Putonghua speakers.

'The Chinese buyers can be divided into four types. Around 30 per cent plan to migrate to Australia and are buying the properties for their own use, while another 30 per cent are shorter-term speculators. The rest are equally split between those who are buying for their children studying here, and longer-term investors who buy ... for rental income.'

Those who buy properties for their children generally have their eyes on smaller flats priced at A$400,000 to A$700,000 (HK$3.13 million and HK$5.47 million). End-users typically buy bigger houses with small gardens, priced at A$3 million to A$5 million. Some big spenders buy at the top end, paying between A$10 million and A$20 million.

'Unlike many Westerners who like to buy old flats or old houses in quiet areas and then redecorate the properties themselves, mainlanders like to buy new flats or new houses in rich neighbourhoods,' Chan said.

The Australian market was not as attractive as Hong Kong's for short-term investors, he said, since its property prices increased at a slower pace.

'In Hong Kong, some property prices double over a three- to four-year period. In Sydney, it would take seven years to see prices double, and buyers of property not for their own use would need to pay a capital gains tax of 20 to 30 per cent on the sale.'

That apparently led to fewer mainland speculators arriving on group tours last year. 'An added disincentive was that the Australian dollar was strong against the US dollar.'

The Australian dollar gained more than 13 per cent against the US dollar last year and now trades at parity or above-parity with the greenback.

But Chan believes longer-term investors will continue to find value in Sydney. 'The living environment and business opportunities in Australia are good. Many mainlanders like to buy vineyards, farms or baby formula businesses ... Also, the days when poor mainland students were packed into a small apartment are gone. Many mainlanders now purchase flats for their children studying in Australia and this trend will continue as Chinese people take their children's education very seriously.'