Chinese Investor Frenzy Adds Fuel to Inner-City Sydney Apartment Boom

THOUSANDS of Chinese investors piled into a property expo in Sydney’s Town Hall on the weekend as analysts tip overseas buyers will keep the city’s inner city apartment market booming for the next two years.

Close to 50 companies jockeyed for the attention of the cashed up Chinese buyers, with apartment projects being spruiked by development giants Greenland Holding Group, MAB Corporation and Frasers Property Australia

About 50 companies jockeyed for the attention of the cashed-up Chinese buyers, with apartment projects being spruiked by development giants Greenland Holding Group, MAB Corporation and Frasers Property Australia.

The property frenzy came as Sydney and Melbourne kicked off the spring auction season with strong results, posting clearance rates of 83.4 per cent and 75.3 per cent respectively on total sales of $545.7 million, according to preliminary figures released by Australian Property Monitors.

“The (auction) results were extraordinarily strong,” said APM senior economist Andrew Wilson. “The Sydney market just keeps rising. Certainly there is no sign of a waning of activity.”

He said a lot of the buyer ­action was driven by investors rather than owner-occupiers.

At the Sydney property expo Maggie Wang bought a house in Bellevue Hill, in Sydney’s east, for about $6m.

Ms Wang, who migrated three years ago, ran an IT and property development company in China and had recently started a wedding planner business in Australia. She said Chinese interest in Australian property was about more than just making money.

“People like the lifestyle, the country and the environment, it’s not just about investment,” Ms Wang said.

Another buyer, 26-year-old Crystal, bought a home in one of Sydney’s wealthiest suburbs, Vaucluse, for more than $5m, with plans to buy more Australian investment properties.

The expo also featured agencies, such as ABC World, which give Chinese investors advice on migrating to Australia through avenues such as the Significant Investor Visa. The visa, implemented by the former federal Labor government, allows foreigners who invest more than $5m in Australia the potential for permanent residency.

Black Diamondz director Monika Tu, who represents wealthy Chinese looking to buy Australian homes, said the visa’s introduction had led to a surge in interest for local trophy homes worth more than $5m.

Ms Tu said inquires to her agency from Chinese property hunters had increased by about 50 per cent this year.

Also at the expo, one of China’s largest developers, Greenland Holding Group, held expressions of interest for its second local project, the $200m ­Lucent apartment tower in North Sydney, while Singaporean-backed Frasers Property Australia marketed apartments at its $2 billion Central Park project at Sydney’s inner-city Chippendale.

The high investor demand for off-the-plan apartments is ­expected to keep Sydney’s inner-city market in boom mode for the next two years, according to forecaster BIS Shrapnel.

BIS Shrapnel said about 5800 apartments were under construction in Sydney while about 11,500 new apartments would be completed over the next three years — the biggest number in the city’s history. CBRE managing director of residential projects David Milton said the uplift in interest from Chinese investors allowed local apartment developments to stack up financially.

Rate rises keep a lid on house prices

SYDNEY homeowners wanting to get rich were dealt a blow last year with six successive rate rises flattening out property values.
Exclusive figures obtained by The Sunday Telegraph reveal Sydney home values failed to rise as high last year as in previous years. The rate hikes since November, 2009 were blamed for the result with median house prices increasing by just 6.51 per cent last year - almost half as much as the previous year, Residex figures show.

The worst-performing houses were in the western suburbs mortgage belt, where the rate hikes had a major impact.

Units fared marginally better with the median price rising 9.42 per cent in 2010 compared to 10.40 per cent a 0.9 per cent decline in the rate of growth.

Sydney's wealthier areas were also not spared with suburbs experiencing negligible growth, or price falls, as the interest rate hikes hit and savvy buyers looked for better opportunities elsewhere, Residex managing director John Edwards said.

"Suburbs such as Rushcutters Bay, Elizabeth Bay and Balmain are traditionally dominated by owner-occupiers and the high prices have clearly placed constraints on how much people can or will pay," he said.

"Today's buyers are thinking very hard about where to buy, the area's prospects and potential for future growth. For the price you pay for units in some of these areas you can buy houses in other suburbs, and that makes them less attractive."

Unit prices were supported by a strong investor market with cashed-up landlords paying premium prices for city apartments The best-performing suburbs were dominated by areas which offered proximity to the city, good transport and lifestyle. Topping the list were Naremburn, Ashbury, Campsie and Kensington, which rose 20-22 per cent.

Finance worker Greg Dick, his wife Pong Pon and their seven-month-old twins Natalie and Thomas are typical of the buyers choosing to live in Kensington and pushing up prices as a result.

They family paid a record price of $1.948 million in October for a four-bedroom plus study home in the Raleigh Park Development through Wayne Marks of LJ Hooker Kingsford.

"I basically chose Kensington because we ideally wanted to live in the eastern suburbs and the suburbs directly east and northeast are expensive for what you get," Mr Dick said.

"The area's built out now but there's a lot of renovation going on and we believe still a lot of opportunity for capital growth."

Landlords enjoyed significant rent increases in many suburbs as low affordability keeps many in the rental market. Median rents across the city's units rose by 7.1 per cent or $30 to $450, and by 7.4 per cent or about $30 to $510 a week. The median value for a Sydney unit is $477,500.

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