Chinese Multi-Millionaires "Try-Before-Buy" in Sydney's Most Palatial Mansions

Chinese Multi-Millionaires "Try-Before-Buy" in Sydney's Most Palatial Mansions Manish Khanna
Manish Khanna
Sunday 17 Sep 2017

Australian Luxury real estate has been gaining popularity with foreign investors for many years, and the trend shows no signs of reversing anytime soon.

The latest buying spree of apartments and homes in Sydney by Chinese families is proof that Sydney's property market offers the right mix of value and luxury living to buyers abroad, but what motivates them to invest in Australia's commercial hub, and what goes into their decision - making process when buying a property here? Knowing the answers to these questions is essential for any Sydney property professional.

Chinese Buyers still Investing Heavily in Sydney: What's The Appeal?

Recently the media has been abuzz with reports of wealthy Chinese families snapping up properties across New South Wales, especially in the greater Sydney area.

Despite criticism from some quarters, the presence of Chinese buyers in the market is helping to drive prices ever higher. An estimated 26% of properties on the market in Sydney are bought by foreigners - and Chinese buyers make up 77% of those sales, putting Chinese ownership of recently - sold homes at 20% 
Unlike local buyers, Chinese investors have the option of buying homes in North America, Europe, and the Caribbean - to name just a few popular regions.

Sydney appears to be beating these markets when it comes to attracting the interest of Chinese buyers for two reasons: proximity to China (Australia is closer than any other major developed nation) and a combination of affordable property and excellent rental yields.

''Affordable isn't the first word most Australians associate with Sydney, with the city's average house price almost doubled since 2009, but the average cost of an apartment there is significantly lower than the equivalent property in Shanghai. With rental yields at approximately 3% - double that of Shanghai’s 1.5% - the decision by Chinese investors to buy property in Sydney makes extremely good business sense.

Luxury real estate property in Australia

Chinese Buyers Enter at the High End of The Market

The uptick in Chinese property investors - especially those with multimillion - dollar budgets - is an indication of just how much belief wealthy foreign investors have in Australia's future. Their presence in the market is a vote of confidence in the Australian economy, and new regulations that aim to limit foreign ownership have done little to dampen their enthusiasm.

The Chinese buyers who show the greatest interest in Sydney luxury real estate are frequently foreign- educated, successful entrepreneurs and professionals who share a common mindset with Australians and are seeking a stable future for their children and grandchildren. Far from threatening the local market, they are long - term investors and residents who are likely to stimulate the local economy by consuming high - end goods and services, educating their children, and starting businesses in the city. 

The presence in the market shows no signs of diminishing and it is providing excellent stimulus for the Sydney luxury real estate market.

Chinese presence in the Sydney property market: what the numbers say
Official government statistics reveal that there is truth to the reports of Chinese buyers snapping up properties in Sydney at a significant rate. Government figures confirm that a 19% jump in residential applications was led by Chinese buyers - despite increasing efforts at federal level to limit their presence in the market.

Recent changes to the federal tax regulations, including higher fees for foreign buyers and penalties on homes that are vacant for more than 6 months of the year, have been implemented to protect native - born Australians' access to the property market. While some critics see this move as protectionist, it does ensure that only the highest calibre of foreign have access of luxury real estate in Sydney. To date, these new regulations have done little to deter high net - worth Chinese investors, who continue to buy homes and apartments as part of an innovative try - before - you - buy system.

Test - driving life in Australia - the latest sales mechanism to attract foreign investors

As over a billion Chinese nationals and their descendants around the world observed the year of the rooster, a select group of 20 Shanghai millionaires and their families were on their way to Sydney to usher in the Chinese New Year in style. These families, each with a net worth exceeding $10 million, will enjoy six months of luxury living in spectacular mansions across the city as they experience Australian life first hand.

From exploring the chic nightlife to enrolling their children in Sydney's finest private schools and establishing high - level business contacts, these prestigious buyers will have half a year to make their final decision on property purchases that run into millions of dollars.

Far from being stereotypical Chinese buyers who purchase Australian property and leave it vacant for years, these families are demonstrating their commitment to living and integrating into the country's biggest commercial city. As new residents go, Sydney should be pleased to host these influential and committed investors.

With many wealthy Chinese citizens opting to relocate their families to the West, citing the freedoms, entrepreneurial mindset and environmentally conscious lifestyle that countries like Australia must offer, Sydney stands to gain many progressive thinkers and dynamic business people as the trend for Chinese investment continues.

Australian Buyers Still Dominate the Market

There are local buyers in every city in the world who protest the presence of foreign investors, and Sydney is no exception. As some of the more vocal critics of Chinese investment make their point in the press. It's worth remembering that Australians still own most of the properties in Sydney - and account for 74% of buyers in the market. Federal regulations limiting the presence of foreign buyers should ensure the availability of properties for Australian families while keeping the door open to top class foreign investors who are showing enduring faith in the Sydney luxury real estate market.

For the time being Chinese investors show no signs of losing interest in Sydney's wide range of luxury real estate. For current owners, property agents and international property investment brokers, the potential for profitable dealings with our new neighbours is excellent. Understanding the needs, preferences and aspirations of these select buyers from abroad is an essential step in establishing a business relationship and benefiting from their ongoing presence in the property market.