China capital flowing back into property market

Renewed interest from international investors has seen Chinese capital flow back into in the Melbourne commercial property market at a rate not seen in five years.

Stonebridge Property Group partner, Asia practice, Chao Zang, says the company sold six properties to new Chinese investors in the past last week alone, worth a combined $12 million. They included shops at Aston Village, in Craigieburn, and 1/674-680 Glenferrie Road, Hawthorn, for $3.85 million.

He said renewed interest was also coming for larger, development assets. “We have met with four ultra-high-net-worth Chinese buyers this year, each looking to spend more than $30 million on either development of passive investment opportunities,” Zang said.

“We have not seen this much new Chinese capital coming into the country since 2017”.

Chang said the lifting of COVID-19 restrictions in China, combined with pent-up demand over the pandemic, appears to be a catalyst for the capital inflow.

“With the loosening of border restrictions between China and Australia, and the influx of students returning to Victoria, we expected an uptick of inquiry from Asian buyers, but we were surprised to see such a strong desire to purchase,” he said.

‘We have not seen this much new Chinese capital coming into the country since 2017.’

Stonebridge Property Group partner, Asia practice, Chao Zang.

Stonebridge is marketing two development sites in Box Hill and has seen more than 90 inquiries for each property during its campaigns, including high-net-worth investor interest from China.

According to the 2023 ANREV investment intentions survey, Sydney and Melbourne edged out Tokyo among the top three investment destinations for institutional investors in the Asia Pacific region this year, with respondents indicating an expectation to increase their allocations to Asia Pacific real estate over the next two years.

Josh Rutman, head of capital markets, Victoria at JLL, says despite a short-term dip in transaction volumes in the first quarter, international investors are expected to play a significant role in driving an increase in transaction activity in the second half of 2023.