Australia's property moves unlikely to deter Chinese buyers
Evergrande sale order and new fees will not dampen interest, analysts say
Australia's rare move to name and shame a Chinese developer and its plan to impose extra fees on foreign homebuyers are unlikely to deter Chinese interest in one of the hottest real estate markets, industry experts said.
However, they said foreign buyers must familiarise themselves with regulations and hire trustworthy consultants as the "I didn't know" excuse will not mean anything to the authorities.
Treasurer Joe Hockey on Tuesday told Evergrande Real Estate Group, China's fourth-largest developer by sales, to sell a A$39 million (HK$236 million) mansion in Sydney within 90 days as its purchase last year violated rules.
The news was followed by an announcement from another Chinese developer, China Aoyuan Property Group, that it had spent A$121 million on a prime site for luxury residential development in Sydney through a 70-30 joint venture with Australian partner Ecove.
"[Evergrande's case] will provide people some caution and they will do a bit more homework on the regulatory side before they make acquisitions," said Andrew McCasker, the head of property finance for South and Southeast Asia at National Bank of Australia. "But I don't think it is going to adversely impact people's desire to buy property in Australia."
Evergrande spokesman Ke Peng said: "The company appointed a professional law firm in Australia to handle the transactions in relation to that particular property.
"The company will fully cooperate with the arrangements of the Australian authorities to ensure compliance with legal provisions there."
To cool a worrisome surge in home prices partly fuelled by Chinese buyers, the Australian government last month proposed application fees of A$5,000 for foreigners buying homes costing less than A$1 million and A$10,000 per A$1 million for those costing more.
Latest data from the Foreign and Investment Review Board showed approvals relating to residential property totalling A$17.2 billion were granted to foreign buyers in the 2013 financial year, down 13 per cent from the previous year.
Meanwhile, Chinese investment in all Australian real estate, including residential, commercial and agricultural properties, rose 42 per cent to A$5.9 billion.
While the Chinese have been blamed for pushing up property prices, global consultancy JLL's Australian head of research David Rees said the Chinese were contributing on the supply side too, as a rising number of Chinese developers stepped up their expansion overseas.
Chinese developers including Greenland Group and Beijing Capital Land are increasing investment in foreign cities such as Sydney, Melbourne, New York and London where they see a rising number of Chinese families sending their children for better education.