Asian property giants sidestep Australia's foreigner rules

Aspial

15/02/2016 06:56

* Foreign "off the plan" developments unaffected by 
crackdown 
    * Boom is focusing on city of Brisbane 
    * Land values soaring 
 
    By Byron Kaye 
    SYDNEY, Feb 15 (Reuters) - A loophole in Australian property 
rules has helped overseas developers invest what industry 
executives believe were record levels in the country in 2015, 
casting doubt over the efficacy of curbs intended to keep a lid 
on soaring prices. 
    Newly built properties are exempt from rules on existing 
homes that restrict sales to foreigners, creating an opportunity 
for overseas investors to get into one of the world's fastest 
growing housing markets. 
    That has left a thorny problem for Australia, grappling with 
the politically sensitive issue of unaffordable homes and a 
surge of cash from wealthy Chinese that has prompted regulators 
to consider tighter anti-money laundering rules.  urn:newsml:reuters.com:*:nL3N1531TG 
    A Reuters review of the last 20 Foreign Investment Review 
Board annual reports shows foreign-financed residential "off the 
plan" construction approvals hit a record total value of A$16.4 
billion ($11.6 billion) in 2014, triple the previous year. 
    Analysts and industry players expect that 2015 will turn up 
an even higher number. Official data is released in April. 
    In an indication of demand, National Australia Bank Ltd 
 NAB.AX  has extended its largest Islamic financing to date for 
a A$160 million real estate purchase in Brisbane by 
Singapore-based firm AEP Investment Management (AEPiM), part of 
Saudi Arabian conglomerate Al Rajhi Holding Group.  urn:newsml:reuters.com:*:nL8N15Q012 
    TH Properties Sdn Bhd, the real estate arm of Malaysia's 
pilgrims fund Tabung Haji, completed a A$220 million Sydney 
development in November. 
    Chinese buyers are also key, fuelling demand for companies 
like Land & Homes  LHM.AX , which had its market debut last 
month, becoming the first listed developer to target 
predominantly overseas buyers. 
    "The mainland Chinese (want) to come to Australia for 
education and generally they are buying a residence so the 
family can come over and stay," said Choon Keng Kho, a director 
of Land & Homes. "We can incorporate what they need into the 
design and, secondly, when dealing with them." 
    Land & Homes paid A$21.3 million for a four-floor government 
building in Australia's No.3 city Brisbane, which it plans to 
convert into a 30-storey, 389-apartment tower. 
     
    HEADING NORTH 
    Australia's two largest cities, Sydney and Melbourne, have 
seen double-digit price rises in recent years. Big Asian 
investors like Land & Homes are now turning their attention to 
Brisbane, left relatively unaffected as a stalling economy kept 
land values in check. 
    That city's economy has since rebounded, attracting buyers 
to a subtropical city of 2 million people about 1,000 km (620 
miles) closer to Asia than Sydney. As a result, from 2013 to 
2014, the average land value of residential development sites in 
Brisbane doubled. 
    The average value of offshore-originating development site 
purchases quadrupled while purchases from Australian developers 
were flat, according to agent CBRE. 
    "The entry of some of these participants has been pretty 
aggressive," said Mark Steinert, CEO of Australian developer 
Stockland Corp., which in 2015 bought a stake in two 
locally-owned Brisbane residential tower projects but otherwise 
has limited exposure to apartments. 
    "Whether they make adequate profits or not, time will tell, 
but from a customer point of view, one would anticipate that it 
means more supply and therefore good opportunities." 
    Guangzhou R&F Properties Co Ltd  2777.HK  in 2015 paid 
Brisbane-based Metro Property Development A$46 million for a 
site for which that group paid A$24 million six months earlier. 
    World Class Land, owned by Singapore conglomerate Aspial 
Corp  ASPA.SI , paid Australian developer Cornerstone A$36 
million for a Brisbane apartment site, more than double what 
Cornerstone paid Metro in 2013.     
    ($1 = 1.4178 Australian dollars) 
     
     
 
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Foreign home purchases in Australia    http://tmsnrt.rs/20WK6oC 
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 (Reporting by Byron Kaye; Editing by Clara Ferreira Marques and 
Stephen Coates) 
 ((byron.kaye@thomsonreuters.com; +612 9321 8164; Reuters 
Messaging: byron.kaye.thomsonreuters.com@reuters.net; 
@byronkaye)) 
 
Keywords: AUSTRALIA CHINA/PROPERTY