Dose

Fairfax: The Yellow Peril is upon us

501 posts in this topic

I'd love for Chodloy Wontok to make an appearance at one of those public hearings. :)

Sounds like a drag queens name.

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Buyers keen to pay 'whatever it takes'

 

 

 

Buyers around the country are showing they're willing to pay "whatever it takes" for their dream property.

In Sydney, the highest-reported auction sale on the weekend was $103.01 million for a six-bedroom home at 5 Vanny Place, Maroubra, which was more than ninety three million dollars above the written reserve.

Local Chinese buyers (AKA locals) were engaged in a fierce bidding duel and the successful party - upgraders from Kogarah Bay - were convinced their opponents were investors from mainland China, although they were from Mascot (AKA locals).

The six-bedroom home, built in the 1980s, had a pool and views of the ocean and was sold through Ballard Property.

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Another property that was due to go to auction on Saturday sold two weeks prior.

The impressive 1890s sandstone home Norwood, at 27 Woolwich Road, Hunters Hill, sold for about $3.5 million through McGrath Estate Agents.

However, the standout auction sale of the weekend nationally was in Melbourne.

A Toorak mansion sold for $6,008,000 through RT Edgar.

The grand home at 29 Hopetoun Road, with seven bedrooms, six bathrooms and a three-car garage, was declared on the market at $5.65 million so the sale was $358,000 above the reserve price.

Bidding had opened on a vendor bid of $5 million but two parties then fought it out to achieve the final result.

RT Edgar's Paul Pfeiffer refused to disclose any information about the sale, although the Chinese buyer is believed to be a local upgrader.

However, he said he had noticed plenty of buyers from mainland China looking at upper-end properties (well they looked Chinese so they must have been from the mainland).

"Particularly for properties priced over $5 million," Mr Pfeiffer said.

"They are certainly out there shopping ... I don't think much has changed hands yet, but it soon will if Sydney is anything to go by." (I couldn't tell an emigre from a tourist bus to be fair)

The Hopetoun Road property has been sitting vacant for six months, with the vendor having returned to Israel.

"I reckon it is a fantastic result," Mr Pfeiffer said.

"The house is 14 years old and a little bit tired, but the new buyer will do some work to it."

A house in the otherwise depressed market of Canberra sold for actual money. 

Canberra's highest sale $2.3 million for a stately home at 22 Sheehan Street, Pearce. The result was $800,000 above the previous record for the suburb.

Well blow me down one analyst was heard to say. Buy property in Canberra. If you can't then just buy property anywhere. Buy, buy, buy.

 

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Guardian: Chinese investment in the housing market has been overhyped

 

 

The federal Government has announced it will be holding a parliamentary inquiry into foreign investment in Australia’s real estate market.

The announcement follows reporting and commentary in various media (including Guardian Australia) on how locals are being priced out of the property market by Chinese investors. Most recently these articles have relied on information either from the Foreign Investment Review Board (FIRB), or a Credit Suisse report which analysed the FIRB numbers along with immigration figures to estimate investment from Chinese nationals. Credit Suisse put its estimate of Chinese investment in Australian property at $5.4bn in the last financial year.

The FIRB provides a breakdown of foreign investment in real estate, but only includes the top handful of countries and lumps residential and commercial real estate together. Here’s how the past 10 years of investment look:

1620bd91-8f56-48f2-b724-5002ca503d70-460Ten years of investment.

 

China has become the highest investor only in the last financial year, overtaking the US as the biggest investor. Chinese investors spent about $5.9bn in 2012-13. This would be even higher if the $649m from Hong Kong is added, but the FIRB split these into different categories.

Of this total, it’s not clear how much is residential, and how much commercial, as the FIRB doesn’t provide this split by country. But there is an overall split for foreign investment dollars by property type, and the ratio is two-thirds commercial to one-third residential. So, if Chinese investors are split along the same ratio, we’re looking at only about $1.9bn of investment in residential properties in the last financial year.

On the whole, investors from the US have often spent far more than those from China, and Canada has also surged strongly in the past year. Yet we’ve heard little about Americans and Canadians coming here and “pricing locals out of the market”.

It’s possible that American and Canadian investors aren’t buying as many residential properties, and are focusing more on commercial. The number of foreign investment approvals (this includes all sectors, not just real estate) for China is far greater than for any other country:

This may indicate a large number of smaller-value investments in residential property (Credit Suisse certainly think it does). Real estate certainly has more approvals than any other sector, with 12,647 to the next highest 289 approvals, for mineral exploration and development. And residential accounted for most of these – 11,668 approvals to 357 for commercial.

One other detail about the Credit Suisse report – when counting the total amount of investment from Chinese, they included both non-residents (FIRB data) and permanent residents (estimated from ABS migration figures, average home ownership figures and median house prices), which is why their total varies so much from the FIRB figures above.

In the Credit Suisse analysis, permanent residents accounted for almost 50% of the total $5.4bn Chinese investment figure. It’s not entirely clear why they grouped permanent residents in with foreign investors, since the two are very different – permanent residents live, work, own businesses and pay taxes in Australia.

Apart from all this, the rules around foreign investment in real estate are explicitly aimed at increasing housing stock overall and benefiting the building industry. Non-residents can buy a new development, or redevelop an existing property, but only if it results in at least two new dwellings for each one acquired. They cannot simply buy an existing property. Temporary residents can acquire one existing property for use as their residence in Australia.

In January 2014 purchase of new dwellings totalled 2,786 to 42,937 for established dwellings (using the ABS trend estimates). Assuming this same ratio holds over the year, this means foreign investors would be competing only with a very small subset of local home buyers, as the vast majority of locals would be buying an established property.

So the actual amount from non-resident Chinese investors going into residential property is probably a fair bit lower than suggested by some recent news reports, and they are rarely competing with most local home buyers. It would be fair to say the impact of Chinese buyers has been somewhat overstated.

Indeed, other analysts have said low interest rates, increased housing affordability and domestic investors are doing much more to push up prices than foreign investors.

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NEWS: Chinese investors eager to spend in Aust

 

 

CHINESE investors are chomping at the bit to spend $500 billion abroad over the next five years, and Australian real estate is near the top of their wish list.

But no one is sure how long Chinese interest in new apartments and high-end houses in Sydney and Melbourne will last.

It's a contentious issue around Australian kitchens and boardrooms, especially if you're one of the many people approaching retirement who've secured an investment property and loaded up on debt.

If you believe prominent banking analysts and the Chinese leadership, Australian property prices have got a long way to run, underpinned by supply issues and foreign investment.

But if China suffers a big shock and large amounts of capital leave our shores, what will happen to real estate prices in the nation's largest cities?

Over the past year Sydney house prices have risen almost 15 per cent while Melbourne prices are 11 per cent higher.

National average house prices are up 10 per cent and debt owed by households is rising by more than eight per cent annually.

Chinese investors, the largest group of overseas property buyers, are well known for aggressively bidding up prices at auctions, raising the ire of locals who have missed out.

The link between Chinese investors and higher prices has also been made in analysis by Credit Suisse, which found rich Chinese investors are buying almost one fifth of new housing built in Sydney as part of a $5 billion annual outlay on Australian real estate.

Credit Suisse forecasts Chinese investors will purchase another $44 billion worth of property over the next seven years after spending $24 billion over the past seven years.

"Chinese buying power will increase as the economy develops," the report said.

Chinese leaders continue to talk up the country's eagerness to invest in Australian real estate, as well as the established local investment channels of resources and energy.

China's ambassador to Australia Ma Zaoxu recently told a business lunch in Perth that China Australia two-way investment had been expanding, with non-financial investment in Australia, including real estate, totalling $US3.94 billion ($A4.35 billion) in 2013, an increase of 82 per cent.

"There's great potential for an increase in Chinese investment in this country," Mr Ma said.

"Still much more is to be tapped."

He said Australia was one of China's major investment destinations.

Last year China's nonfinancial direct investment in Australia was around US$17 billion, while outbound foreign investment is expected to be US$500 billion in the next five years, he said.

Mr Ma said Chinese investment in Australia included real estate as well as energy and resource development, agriculture and manufacturing and financial services and IT.

In spite of the bullish investment forecasts, Chinese nationals only account for a small amount of local property owners.

It comes as a Federal Parliamentary Committee is examining the laws governing foreign investment and whether investment is driving up prices.

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A change in trend ahead for our chinese investors in Oz ... just as the government starts looking into the matter? Talk about shutting the gate after the horse has bolted! 

 

SMH: Fire sale: Chinese selling off Hong Kong luxury homes

 

 

Cash-strapped Chinese are scrambling to sell their luxury homes in Hong Kong, and some are knocking up to a fifth off the price for a quick sale, as a liquidity crunch looms on the mainland.

Wealthy Chinese were blamed for pushing up property prices in the former British territory, where they accounted for 43 per cent of new luxury home sales in the third quarter of 2012, before a tax hike on foreign buyers was announced.

The rush to sell coincides with a forecast 10 per cent drop in property prices this year as the tax increase and rising borrowing costs cool demand. At the same time, credit conditions in China have tightened. Earlier this week, the looming bankruptcy of a Chinese property developer owing 3.5 billion yuan ($620 million) heightened concerns that financial risk was spreading.

"Some of the mainland sellers have liquidity issues - say, their companies in China have some difficulties - so they sold the houses to get cash," said Norton Ng, account manager at a Centaline Property real estate office close to the China border, where luxury houses costing up to HK$30 million ($4.3 million) have been popular with mainland buyers.

Property agents said mainland Chinese own close to a third of the existing homes that are now for sale in Hong Kong - up 20 percent from a year ago. Many are offering discounts of 5-10 per cent below the market average - and in some cases as much as 20 percent - to make a quick sale, property agents and analysts said.

'Ghost town'

In a Hong Kong housing development called Valais, about 10 minutes drive from the Chinese border, real estate agents said that between a quarter and a half of the 330 houses are now on sale. At the development's frenzied debut in 2010, a third of the HK$30-HK$66 million units were sold on the first day, with nearly half going to mainland China buyers.

Dubbed a "ghost town" by local media, the development built by the city's largest developer, Sun Hung Kai Properties Ltd , is one of many estates in Hong Kong where agents are seeing an increasing number of Chinese eager to sell.

"Many mainland buyers bought lots of properties in Hong Kong when the market was red-hot three years ago," said Joseph Tsang, managing director at Jones Lang LaSalle. "But now they want to cash in as liquidity is quite tight in the mainland."

A spokesman for Sun Hung Kai said the current occupancy rate at Valais was 75 per cent, and most of the second-hand units for sale were "looking for a good selling price and not eager to sell at deep discounts."

Cashing out

In a nearby development called The Green - developed by China Overseas Land & Investment - about one-fifth of the houses delivered at the start of this year are up for sale. More than half of the units, bought for between HK$18 million and HK$60 million, were snapped up by mainland Chinese in 2012.

China Overseas Land was not immediately available to comment.

"Some banks were chasing them (Chinese landlords) for money, so they need to move some cash back to the mainland," said Ricky Poon, executive director of residential sales at Colliers International. "They're under greater pressure from banks, so they're cutting prices."

In West Kowloon district, an area where mainland Chinese bought up close to a quarter of the apartments in many newly-developed estates, some Chinese landlords are offering discounts on the higher-end, three- to four-bedroom apartments they bought just a few years ago.

This month, a Chinese landlord sold a 1,300 square foot (121 square meter) apartment at the Imperial Cullinan - a high-end estate developed by Sun Hung Kai in 2012 - for HK$19.3 million, 17 percent less than the original price. The landlord told agents to sell the flat "as soon as possible," said Richard Chan, branch manager at Centaline Property in West Kowloon.

In the same area, a 645 square foot, 2-bedroom flat in the Central Park development was sold in just two days after the Chinese owner put it on the market at HK$6.5 million in what agents called the year's best bargain - the cheapest price for a unit of its kind over the past year.

"The most important thing for them is to sell as soon as possible," Centaline's Chan said. "In the past two weeks, those who were willing to cut prices were mainland Chinese. It is going to have some impact on the local property market, that's for sure."

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SMH: Sydney 'for sale': prime locations up for grabs

 

 

The Sydney Harbour Federation Trust has earmarked three prime sites on the northern side of Sydney Harbour for long-term lease and development, including to overseas-based Chinese investors.

The three sites, two of which are prominently on the ridgeline with sweeping water views, are presently advertised as being ''unique Sydney Harbour tourism opportunities'' on a Chinese website which links to the NSW Trade and Investment branch office in Shanghai.

Two of the sites are within the Headland Park at Mosman owned by the Sydney Harbour Federation Trust, and one is at North Head. They include the old North Head Officers Barracks, a 3500-square-metre parcel of land containing five former Defence cottages, and a 6000-square-metre lot which includes three former fuel tanks from the 1940s.

The move comes amid rising concern over the commercialisation of Sydney's parks and public spaces.

In the version of the document that is live on a Chinese website, one of the sites is listed as available for ''purchase''.

However the head of the Trust, Geoff Bailey, said on Friday the reference to purchasing had been in an ''erroneous'' draft sent by the NSW government to his office and corrected last September. He said the corrected version should have made clear that the sites were available for lease only, and that expressions of interest, not firm proposals, were being called for at that stage.

He said subsequently the plan to call for expressions of interest on the three sites was withdrawn in December because ''frankly we had enough on our plate already, and we decided we didn't have the resources to proceed with it at this stage''.

But Mr Bailey said the plan to make the sites available for lease

and ''adaptive re-use'' was ''still in prospect''.

Mr Bailey said NSW Trade and Investment had approached his office in June 2013 inquiring whether ''any Harbour Trust leasing opportunities would be suitable to include in an Australian tourism investment guide''.

He understood the request was made to boost a suite of offerings which Premier Barry O'Farrell took with him on a trade mission to China towards the end of last year.

The Trust had suggested those three sites at the time, he added, because ''we were coming to the end of our [other] available buildings for lease''.

The Trust manages about 400 former Defence buildings on prime land around Sydney, including at Cockatoo Island, and more than 100 in Mosman.

The draft brochure describes the fuel tanks as ''a unique development opportunity for the creative investor … [with] generous scope to reimagine these structures to capture extensive water views and the surrounding bushland environment".

It suggested that the site of five cottages with ''unsurpassable views to the headlands'' could provide an ideal opportunity for a ''boutique accommodation offering''.

The president of the Headland Preservation Group, Linda Bergin, said the Sydney Harbour Federation Trust had a duty to preserve heritage and open space, adding "it is wrong to consider proposals which would alienate the public by long-term leases for private purposes".

Ms Bergin has been spearheading objections to another controversial proposal for an aged-care home on Middle Head.

A spokesman for the Department of Trade and Investment said the original brochure "unfortunately carries an editing oversight" by using the word purchase rather than lease.

"However in the same [document] … it clearly states that 'leasing' of this site will be subject to a public tender process," he said.

The spokesman added that ''while the brochure generated interest in many of the buildings and sites featured, no inquiries were received for the Sydney Harbour Federation Trust sites''

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For the main though its only new homes and units they buy.

Does this really matter to affordability? I would imagine in the long run it will make things cheaper as it will drive supply artificially higher.

None of the articles seem to explain this. Sure they say existing homes are excluded from their percentages but nothing around the difficulty foreign buyers have buying existing homes.

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For the main though its only new homes and units they buy.

Does this really matter to affordability? I would imagine in the long run it will make things cheaper as it will drive supply artificially higher.

None of the articles seem to explain this. Sure they say existing homes are excluded from their percentages but nothing around the difficulty foreign buyers have buying existing homes.

 

Apparently they can buy existing, knock it down and rebuild - so now addition to supply.

 

The change was introduced in 2009 (thanks to Rudd), details are somewhere on the FIRB web site.

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Apparently they can buy existing, knock it down and rebuild - so now addition to supply.

The change was introduced in 2009 (thanks to Rudd), details are somewhere on the FIRB web site.

Hmm interesting.

You would imagine they would still have to be capitalising more heavily on a block than the prior dwelling but, yes I can see how that is not as positive as I first thought.

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Hmm interesting.

You would imagine they would still have to be capitalising more heavily on a block than the prior dwelling but, yes I can see how that is not as positive as I first thought.

 

For the main though its only new homes and units they buy.

Does this really matter to affordability? I would imagine in the long run it will make things cheaper as it will drive supply artificially higher.

None of the articles seem to explain this. Sure they say existing homes are excluded from their percentages but nothing around the difficulty foreign buyers have buying existing homes.

 

I'd just like the government to produce reasonable statistics and confirm that they are actually enforcing the rules. 

 

- Do students really sell their houses when they leave?

- What checking does the government actually do - given both Chodley Wontok and the zero foreign buyer rejections

- How much money is going into existing housing?

 

And the key thing: are the existing rules in the best interests of Australians.

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deleted, Medved posted in property everywhere else.

Edited by Dose

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Nor is it the case that overseas investors are taking over the country. While the value of approvals of residential real estate by the Foreign Investment Review Board grew last year to $5.4 billion - up from $2.9 billion a year earlier - this was less than 3.2 per cent of the $185 billion Australians borrowed from banks to finance residential real estate purchases in the same time.

If the cash, rather than bank loans, Australians used to buy housing is added to the total, the foreign investment becomes even smaller by comparison.

''That's swamped multiple times by the amount Australians put in,'' Eslake says. ''For the most part, it's people in their 40s and upwards who are driving the upward pressure on prices.''

Read more: http://www.smh.com.au/business/boom-threatens-the-great-australian-dream-of-a-home-20140404-3645c.html#ixzz2y6N15l2d

 Debt.  Pure and simple.   

 

 

 

''I'm surprised there isn't more anger among young people about the way in which the housing system has been rigged against them by their parents,'' Eslake says. ''Perhaps young people are getting their revenge by refusing to move out of their parents' homes!''

Read more: http://www.smh.com.au/business/boom-threatens-the-great-australian-dream-of-a-home-20140404-3645c.html#ixzz2y6NPAJhx

 …or simply refusing to buy at these multiples…  That would be the best way forward, for the kids, anyway.

Edited by Dose

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Then there were weird quotes from Harry Triguboff in News Ltd in 2011 attributing 75% of his new apartment sales in Sydney to Chinese buyers:

 

Mr Triguboff, whose Meriton Apartments builds more than 1000 units a year, said Chinese owners and investors had accounted for about 75 per cent of Meriton sales (and indeed all other developers) for the last two to three years.

 

Mr Triguboff said the new apartment market relied on Chinese buyers.
 
"The Chinese, they are the only buyers I have. They are the only buyers anybody has," he said.
 
Locals were renting, staying out of the market in a climate where interest rates were expected to rise.
 
"Australians will buy when rents become similar to (mortgage) repayments, but repayments are up because interest rates have risen," he said.
 
Mr Triguboff, the fifth-richest Australian according to Forbes magazine with a $3.4 billion fortune, said it would take another year before higher rents pushed people back into buying homes in bigger numbers.
 

 

 

 

So who are we to believe?  Given that the (detailed?) FIRB figures are apparently confidential and not released to the public.

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I suppose the developer would have nothing to gain from talking up the Choineese angle…   :lol:

 

Buy now, not quite prices-out-forever.  Yet!

 

FIRB does have a lot to answer too…apparently their findings are a secret, which is a bit weird.  Or they just quit trying, which would also get some attention.  

 

Triguboff stands for quality.  Everybody knows that!

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Harry's ghost cities are either world class or the population growth that the government promise mean that a unit built by harry will be filled guaranteed.

 

Govt don't like boat people but they do like air people.

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Can we do Chinese domestic housing bubble stories here too?

 

Security guards, wearing army green, provide the first hint of trouble. An even dozen of them line the stairs leading to a sales office on the fringes of this coastal city in eastern China. It’s a tunnel of camouflage, which prospective property buyers must pass through before entering the main building. And that’s just the outside security detail.

 

Inside, a further 31 uniformed guards stand stiffly around the perimeter, while 10 bulky men in plain clothes occupy all the available chairs. It’s hardly the ideal environment to buy an apartment in the 23-tower development under construction next door.

 

But the muscle is not in place to control would-be buyers. It’s been brought in by the developer, New Century Real Estate, to intimidate protesters who have spent the last three weeks picketing the company.

 

Such a protest, in a country that cherishes the appearance of harmony above all else, is certainly unusual. But even more unusual is the lack of a quick fix, engineered by the local government to paper over any loss of confidence in the property sector and prevent the details becoming public.

 

For those wanting to better understand China, this is an opportunity.

 

The messy property dispute, playing out three hours from Shanghai, provides a rare insight into strains in the property industry. It shows that, contrary to popular belief, ­Chinese home buyers are indeed carrying a significant degree of leverage and that in many cases two generations of wealth is required to buy an apartment, even in an outlying city. It’s about the nascent signs of an upset that could derail China’s credit markets and send shock waves through the global economy.

 

Investors lose everything

 

Guan Enwei, an export sales manager, is in the middle of this shake-out. In the space of just two years, his decision to buy an off-the-plan apartment from New Century has wiped out the life savings of his family. Worse still, if Guan sold tomorrow he would owe the bank money, even though his apartment won’t be completed for 18 months.

 

Chen Lianfeng, a 46-year-old taxi driver, is among the most highly geared. She used all her savings to fund half the deposit, with the remaining 130,000 yuan borrowed from friends and family. That means she really only has a 10 per cent stake in the apartment, which is now worth significantly less than she has borrowed.

 

“This price-drop has wiped out 10 years of savings for me,” she says.

 

 

http://m.afr.com/p/world/guarding_the_global_economy_biggest_4ZaLHtqeG8IKJdGUZ8FJqO

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China's property dragons are just warming up

 

 

 

Michael Mai believes the surge of Asian investment in Australian property has a long way to run.

Mr Mai's development company, ICD Property, is one of the new wave of Chinese dragons transforming Melbourne's property market.

Established five years ago, ICD now controls five development sites, ranging from the recently launched 632-apartment project Eq Tower in A'Beckett Street, to a 115-hectare house, land and commercial precinct in Geelong.

According to CBRE estimates, Chinese, Singaporean and Malaysian interests have invested $1.3 billion in CBD and city fringe development sites over the past two years.

Chinese developers snapped up the bulk of potential projects, taking 55 per cent of sites by value, far outweighing their counterparts and overshadowing Australian-based developers who took just 2 per cent, CBRE figures show.

ICD's development model is a hybrid of Chinese capital and Australian expertise. Eq Tower will be project-managed by Sinclair Brook, designed by Elenberg Fraser and sold by Colliers International, said Mr Mai, who arrived in Australia in 1997 to study at Scotch College and Melbourne University.

ICD has provided a platform for one of China's large state-owned real estate enterprises, Sino-Ocean Land Holdings and its investment arm Gemini Investments to act as joint venture partners in the Melbourne market.

The business is also backed by a family trust set up by Mr Mai's father, Boliang Mai, chief executive of CIMC, a Hong Kong-listed, large-scale Chinese manufacturer of marine containers, transport vehicles and airport ground handling equipment.

Asian developers were targeting Melbourne because of the end buyer, Mr Mai said.

Offshore development capital has been matched by overseas residential buyers, driving Sydney and Melbourne's apartment booms. Data from the Foreign Investment Review Board reveals $5.9 billion in purchases of Australian property in 2012-13 came from China, a 44 per cent annual increase.

''A lot of people in the past 10 to 20 years [in China] have made quite a bit of money. They want to diversity. We're seeing that just starting - that's why we believe it's quite sustainable,'' Mr Mai said.

ICD development manager Matthew Khoo said more than two-thirds of the Eq project had sold in the past eight weeks to a 50-50 mix of overseas and local buyers.

London, New York, Vancouver and Melbourne were top of the list for Chinese investors.

Malaysia's political instability was driving away investment, the Singapore government's introduction of a 50 per cent loan to value ratio on property purchases had a similar effect, as had Hong Kong's introduction of stamp duties, all of which was underpinning buyer interest in Australia, he said.

 
Edited by cobran20

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