Decreased Chinese and increased Indian investments in Australia's residential real estate sector

Chinese investment into Australian real estate has dropped by $400m in just three months (July 1 - September 30), the latest foreign investment data reveals. Although China continued to be the leading investor in Australia's real estate sector, the number of approvals for foreign investment decreased from 826 ($1.1Bn) in the previous quarter to 523 ($700m), according to the Treasury's Quarterly Report on Foreign Investment.C.53% of the money invested in the quarter came from mainland China and Hong Kong combined. Certain experts believe that the dramatic drop in investment into new, high-rise buildings, was largely driven by interest rate hikes and Covid restrictions on people leaving China, which was only lifted in 2023, and there has been a bounce back of investments from Chinese buyers once the restrictions had been removed. Ray White chief economist Nerida Conisbee said that Indian real estate investment had surged and is on track to have the highest number of approvals on record for the country during the financial year 2023-24, if it continued along the current trend.

“It’s one quarter and (approvals are) already halfway to what was achieved in 2022; it’s really jumping up,” she said.

According to Daniel Ho, due to China’s late opening from the pandemic, buying was still "coming back” and purchasing would grow more quickly than other Asian countries. Additionally, he stated that Chinese buyer inquiries were lower at the time due to the country's holiday schedule, which prevented as much travel to Australia, which was "usually an important part of the buying process."

“The Dragon Boat Festival in end of June saw more Chinese take vacations within China than ever before. So fewer Chinese would have travelled overseas and to Australia than in the pre-Covid years,” he said. But Mr. Ho’s forecast was that Chinese and other Asian buyers would still purchase more property in Melbourne this year than in 2023, and said Victoria and New South Wales were the two most popular states. “Victoria also attracts high-end buyers who like the premium single-family home suburbs like Toorak and the new penthouses that sell for tens of millions of dollars in buildings like Melbourne Square on Kavanagh Street in Southbank,” he said.