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46% of Chinese Investment in Australia in Commercial Real Estate

According to the 10th Demystifying Chinese Investment in Australia report by KPMG and the University of Sydney, 46% of 2014’s new Chinese investment in Australia went to commercial real estate transactions, a marked increase from 2013’s 14%. The report also indicates that 2014 saw private Chinese firms increasing their activity to overtake SOEs in both the number of transactions (85% of total) as well as in total value (66%, AUD$6.23 billion [CAD$5.91 billion in 2014]).

2014 saw 51 private sector deals, more than doubling from 2013’s 25. Changes in economic and policy variables are identified as having contributed to the near quadrupling of year-on-year commercial real estate investment volume to AUD$4.37 billion. Australia has also attracted investment from seven of China’s ten largest developers, and investors have begun to diversify from primarily investing in office buildings and gateway cities to other sectors and locations. Four transactions were valued at over AUD$500 million, occurring in mining, port infrastructure, leisure, and construction, with a combined total of AUD$3.9 billion.

Aside from 46% of investment heading to commercial real estate, 21% went to infrastructure, 12% to leisure and retail, 11% to mining, 7% to energy, 2% to manufacturing, and 1% to agribusiness. Decreasing investment in the energy and mining sectors led to a drop in Chinese investment in Australia of 9.1% between 2013 and 2014, with only 18% (AUD$ 1.66 billion) of the total investment volume going to the energy and mining sectors in 2014 and at the same time as Chinese outbound investment overall was increasing by 11%, globally. 2012 saw US$10.1 billion (CAD$11.7 billion in 2012) of Chinese investment in Australia, 2013 saw US$9.2 billion (CAD$9.8 billion in 2013), and 2014 saw US$8.4 billion (CAD$8.9 billion in 2014).

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