National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Joel Robinson

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 52-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 52-storey tower, which has just shy of 250 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Elevated amenity anchors daily life at Aeris, Melrose Park

Repeat buyers are one of the strongest measures of confidence in any apartment development.

At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.

Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.

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"I had some boxes I wanted to tick," he says.

Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.

“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.

He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.

[smartcode_project:default project_id=135096 project_image_fid=356818]

After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.

"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."

Today, Keith says the move has completely changed how he experiences Newcastle.

"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."

[smartcode_project:default project_id=135096 project_image_fid=356828]

Beyond the location, he says it's the sense of community that has surprised him most.

"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."

For Aimee and Lyle Goodman, the journey started almost by chance.

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The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.

"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."

As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.

"We actually catch up more as a family now," Aimee says.

"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."

[smartcode_project:default project_id=135096 project_image_fid=356829]

Lyle says their confidence came from GWH's reputation within Newcastle's building industry.

"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."

That confidence only grew throughout the buying process.

"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."

[smartcode_project:default project_id=135096 project_image_fid=351104]

Aimee says one moment stood out.

"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."

The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.

Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.

[smartcode_project:default project_id=135096 project_image_fid=356822]

ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;

The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.

[smartcode_project:default project_id=135096 project_image_fid=356826]

For Keith, the appeal remains straightforward.

"You feel at home even before you've moved into your home."

For Aimee, the change is measured in time.

“I just felt like I had more time,” she says.

[smartcode_project:default project_id=135096 project_image_fid=351102]

Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.

ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.

[smartcode_project_cta:default project_id=135096]

From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

China

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EXPERT OBSERVATION
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Juwai's The Foreign Buyer Restrictions Report 2018-19 has found that the world will see fewer new foreign buyer restrictions imposed in top Chinese property destinations in the year ahead than in any of the prior three years. 
The Report points out that Canada’s two largest provinces, six of Australia’s eight states and territories, and Australia’s national government have all increased the taxes or restrictions that apply to foreign buyers of real estate over the past two years.
By contrast, in the year to come, only New Zealand is likely to impose new policies targeting foreign buyers. New Zealand’s Overseas Investment Amendment Bill is now under consideration in Parliament.
The rapid upward trend in Chinese international property investment of the past decade hit the world at the same time as historically low interest rates and population growth were inflating values in popular destination cities. In some places, especially Canada, Australia, and New Zealand, Chinese buyers were blamed for the price increases that objective data suggested was actually due to other factors. 
After retreating from an exuberant peak in 2016 of $101.1 billion, Chinese international real estate investment again appears to be on a growth path, although more steady and restrained that what we saw in that golden year. The Chinese government seems comfortable with what it calls ‘rational’ growth in international investment. 
Beijing has already telegraphed that it may experiment with further loosening capital controls. China has already resumed two key outbound schemes for investment in overseas securities, which had been suspended to reduce capital outflows. These have no direct impact on foreign property buyers, but do reveal a change of direction — from tightening to loosening. The Financial Times has reported it expects some of the controls introduced over the past two years to be ‘quietly relaxed.'
AUSTRALIA The Reserve Bank of Australia, the Australian Treasury, and a Parliamentary inquiry have all found that foreign buyers do not cause house-price inflation in Australia. The national government and six of the eight states and territories have none-the-less found it hard to resist targeting this group with no voice in the political process. Taxing foreign buyers gives state governments the appearance of taking action without having to tackle stamp duty and the planning mechanisms that are a major cause of the affordability crisis. The top Australian destinations for Chinese buyers are Melbourne, Sydney, Brisbane, Adelaide, and the Gold Coast – followed by Canberra and Perth.
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CANADA Canada has seen high bars placed in front of new foreign property buyers over the past two years. But we think that in 2018–19 it is unlikely that new restrictions or taxes will be imposed. New mortgage regulations have weakened the market, by dampening the primary drivers of higher prices, which is local buyers taking advantage of low interest rates to trade up or buy investment homes. 
The most popular Canadian destinations for Chinese buyers are Toronto, Montreal, Vancouver, Calgary, and Ottawa. 
NEW ZEALAND New Zealand is the sole major investment destination in the world that we consider to be very likely to impose new foreign buyer restrictions this year. The Overseas Investment Amendment Bill with its recent amendments would have the advantage of finally putting to an end the political uncertainty that has been ongoing since before the last election. 
The most popular destinations in New Zealand for Chinese buyers are Auckland, Christchurch, Wellington, Queenstown, and Hamilton. 
THAILAND In Thailand, new restrictions on foreign homebuying do not appear likely. Weak economic growth and the desire to tap overseas investors for the massive Eastern Economic Corridor project play role. Thai nationals are already protected by rules that prevent foreigners from owning land and more than half of the units in apartment buildings. 
The most popular destinations for Chinese property buyers in Thailand are Bangkok, Pattaya, Chiang Mai, Phuket, and Ko Samui. 
UNITED KINGDOM In the UK, the only potential legislation restricting foreign homebuyers that we foresee would address illegal Russian investment, not other buyer groups. We believe anxiety about the potential property-related impact of Brexit, currently weak markets, a dependency on foreign luxury in London buyers, and the UK’s proud tradition as a financial and investment center will prevent other measures. 
The most popular destinations in the UK for Chinese buyers are London, Manchester, Liverpool, Birmingham, and Edinburgh. 
UNITED STATES The United States offers the freest market, the largest market, and the most diverse market of any major investment destination for Chinese property buyers. That’s why it attracts the greatest amount of investment year after year. We foresee no new restrictions in the US this year, except perhaps for legislation that prevents the acquisition of real estate near critical military bases. The EB-5 visa program is also a perennial candidate for reform. While changes to the investment visa program with the deed affect Chinese nationals, it is not a residential property investment policy. 
The top American destinations for Chinese property buying are Seattle, Los Angeles, New York, Houston, and Orlando.
Carrie Law is the CEO and director of Juwai.com, the No. 1 Chinese international real estate website and the exclusive international real estate partner to Chinese online giant Tencent.
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jrobinson-rf4aSBido9

New taxes targeting Chinese property investment set to drop worldwide: Juwai

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GUEST OBSERVATION
Chinese direct investment in Australia has declined, according to a new report by the University of Sydney and KPMG. In 2017, the value of investment fell by 11% in US dollar terms, from $11.5 billion in 2016 (A$15.4 billion) to $10.3 billion (A$13.3 billion).
In early 2018, we also surveyed nearly 50 Chinese executives in Australia. The responses show Chinese investors are feeling apprehensive and reluctant to engage in a climate of insecurity created by current debate about China’s role in Australia.
The investment drop occurred in nearly all areas of Chinese investment in Australia, including:
<ul>
<li>commercial real estate, where investment was down 22%</li>
<li>infrastructure (-89%)</li>
<li>food and agribusiness (-8%)</li>
<li>renewable energy (-64%)</li>
<li>oil and gas (-84%).</li>
</ul>
Growth occurred in mining and energy, with a 448% increase in investment, health care (20%), transport (2%) and smaller areas such as services and manufacture (38%).
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The decline in Chinese investment does not come as a surprise. Chinese outbound investment in all countries was down 29% in 2017. Chinese investment in the United States fell by 35% and in the European Union by 17% after large increases in 2016.
Some of this is a result of actions by Chinese regulators since late 2016. They have targeted speculative “irrational” investment and capital flight, grouped outbound investment into three categories – prohibited, restricted and encouraged – and directly intervened in some high-profile international transactions. However, the new regulations and the curb on speculative investments only marginally affect Australia.
The more important news is Australia did not pick up increased Chinese investment in the encouraged industries, namely services, agriculture and infrastructure. These are areas where Australia has strong competitive advantages and is highly complementary to Chinese economic interests.
Combined Chinese investment in Australia’s agribusiness, infrastructure, renewable energy and services halved in 2017. Commercial real estate, the second-largest area behind mining in 2017, has fallen two years in a row.
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The only two growth areas in the encouraged category were mining and health care. <a href="https://www.propertyobserver.com.au/http://www.abc.net.au/news/2018-06-06/lithium-booms-shows-no-sign-of-slowing-as-new-refinery-announced/9840914" target="_blank">Lithium mining</a> and <a href="https://www.australianmining.com.au/news/rio-tinto-waves-goodbye-coal-allied/" target="_blank">Yancoal’s A$3.4 billion acquisition of Rio Tinto’s thermal coal assets</a> boosted mining investment. Health-care investment rose by 20% with several large investments in health service providers and supplements.
Two structural trends have underpinned the decline in investment volume. First, private investors with smaller investment volumes are crowding out larger investments by state-owned enterprises. Second, investment by new entrants is declining in favour of repeat investors.
The report adds fuel to the debate about the Australian government’s political stance towards China and its impact on economic relations. If the intent was to slow down Chinese investment in Australia, this has been achieved.
Feeling less welcome
In our survey, more than half of our respondents either agreed (48%) or strongly agreed (4%) that they felt less welcome in Australia, compared to just over one-third (35%) of respondents in 2014.
Asked about the level of support from major stakeholders, Australian media received the lowest rating overall. Business leaders were seen as the most supportive group. State governments and local councils were also given positive ratings.
Local communities were seen as less supportive, ahead of the federal government. The Foreign Investment Review Board (FIRB) received the lowest government rating.
Two-thirds (67%) of respondents strongly agreed (17%) or agreed (50%) agreed that the federal government was less supportive of Chinese investment than previously. A slightly higher number (70%) stated that the political debate about China had made their company more cautious about investing in Australia.
Half of the respondents (52%) felt that Australia was a safer place to invest than many other countries, down from 63% in 2014. The majority view was in spite of problems such as higher business costs than in the United Kingdom, United States and Canada, difficulties in finding qualified staff, and communication issues with local staff and management.
The Chinese investors’ evaluation of business success over the past three years and the outlook for the year ahead confirms their overall positive attitude towards Australia. Growth in turnover and profitability was reported by 65% percent and 45% of respondents respectively.
For 2018, a similar number of respondents expect growth in turnover (64%) and profitability (42%). Half of the respondents (49%) expressed optimism about business prospects for the year ahead.
Politics plays into business
Personal interviews with a smaller number of local Chinese companies confirmed the prevailing feelings of insecurity and apprehension. Chinese investors discuss the political situation among each other and with head offices in China, which are concerned about negative reporting.
In the absence of positive signals from the federal government, larger investments by state-owned enterprises – in infrastructure building, for example – are unlikely to go ahead.
The report highlights the potential business implications of trying to separate business from politics in the relationship with China. Business co-operation between Australia and China is strategic rather than purely transactional. This means bilateral diplomatic relations have an important signalling function for long-term and large-scale investments.
Australia needs to build up supply chains and infrastructure to maintain its competitive advantage and to increase capacities in growing export industries such as agriculture and services. This in turn requires substantial investments.
<img src="https://counter.theconversation.com/content/98144/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">So far, state governments and business are seen as supportive, but a more predictable diplomatic environment is indispensable for securing long-term strategic investment.
Hans Hendrischke, Professor of Chinese Business and Management, University of Sydney
Wei Li, Lecturer, Business School, University of Sydney
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/chinese-investment-in-australia-falls-as-political-debate-hits-confidence-98144" target="_blank">original article</a>.
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Chinese investment in Australia falls as political debate hits confidence

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EXPERT OBSERVATION
The Reserve Bank Governor Philip Lowe delivered a speech at the Australia-China Relations Institute in Sydney last night.
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What does it all mean?
Governor Lowe noted that while the ascent of the Chinese economy has been positive for Australia, it is also not without its risks: “If a major economic shock were to originate from China over the coming years, its origin is most likely to be in the Chinese financial system...the experience is that the build-up of financial risks like those seen in China is almost always followed by a marked slowdown in GDP growth or a financial crisis. It is important to point out that these outcomes are not inevitable and that China is able to learn from the experience of other countries, including Australia... one of these concerns is that during the big run-up in debt, a lot of bad loans were made.”
The reform of the Chinese financial system has featured in Reserve Bank statements and indeed it is one of the key international risks for the Australian economy. But it is a case of ‘so far, so good’. The Chinese authorities are dealing with the challenges before they materialise – something many other economies haven’t done, waiting instead until a crisis has developed.
The Chinese economy is rebalancing. The authorities are grappling with an economic juggernaut. Efforts are being made to liberalise and deleverage the financial system. Growth has decelerated but is robust and stable. The current focus is on ‘quality’-type growth which targets unemployment of around 4.5 per cent and reduced pollution through supply-side reforms.
Key points from the speech
China’s economic rise has boosted Australia’s income and prosperity: In his speech entitled “Australia's Deepening Economic Relationship with China: Opportunities and Risks”, Dr Lowe is quick to stress the importance of Australia’s economic ties with its largest trading partner: “The deepening of our economic relationship with China has greatly benefited Australia. It has created new opportunities for us and significantly boosted our national income. It was also one of the factors that helped our economy through the global financial crisis.”
Deep economic ties and cultural respect can bind the two countries. The Governor states, “We will, of course, have differences from time to time, but we will surely be better placed to deal with these if we understand one another well. Building strong connections across business, finance, politics, academia and the community more generally is important to deepening this understanding.”
On trade and protectionism: “Together, we can also be a strong voice for the importance of an open international trading system and for effective regional cooperation.”
On the importance of China as Australia’s largest trading partner: “Our trade with China has expanded very rapidly over the past decade, to the point where China is now Australia's largest trading partner. China accounts for nearly one-third of our exports and around one-fifth of our imports”.
Growing export diversification: While Governor Lowe acknowledged the significant contribution that Australia’s bulk commodities, iron ore and coal (57 per cent combined total exports), make to national income, he stressed that it “... would be a mistake to view the trade relationship solely in these terms. Our exports to China are much more diverse than this.”
On Australia’s services sector bonanza: “Over the past decade, Australia's service exports to China have grown at an average annual rate of 15 per cent...the growth has been particularly strong in the areas of tourism and education.”
Record Chinese tourists flock ‘Down Under’: “Last year there were 1.4 million visitors from China to Australia, up from around 400,000 a decade ago...they now account for around 25 per cent of total visitor expenditure in
Australia, a considerably larger share than any other country.” said Dr Lowe.
The Governor also emphasises that education is Australia’s third largest export: “On the education front, there are currently around 200,000 Chinese students studying in Australia. Education exports to China now account for around one-third of Australia's total education exports.”
The ‘Dining Boom’ continues: “China has become the largest single export market for a range of Australia's manufactured food items. Exports of dairy products and alcoholic beverages have grown especially strongly, as have a range of other food and health-related products (of which vitamin sales are often remarked to be growing strongly).”
On China’s foreign investment: “Chinese investment accounts for only a small share of the total stock of outstanding foreign investment in Australia – just 3 per cent.”
Strengthening financial sector linkages: “The RBA sees first-hand the stronger financial relationship between our two countries. Since 2012, the RBA has had a currency swap agreement with the People's Bank of China, with the goal of giving market participants in Australia confidence that renminbi (RMB) will be available for trade settlement and other payment obligations. The RBA also now holds 5 per cent of our foreign currency reserves in RMB.”
Chinese population growth and growing cultural ties to Australia: “Over the past decade, the Chinese-born resident population in Australia has grown at an average rate of around 8 per cent per year. According to the latest Census, people born in mainland China account for 2 per cent of Australia's population (around 510,000 people).... Mandarin is now the second most commonly spoken language in Australian homes and Cantonese the fourth most common.”
On China’s economic rebalancing: “It is too early to tell whether the authorities will be successful in managing the transition from a growth model heavily dependent upon the accumulation of debt to one where credit is less central. It is a very significant task.”
China’s growing debt load poses significant risks: “If a major economic shock were to originate from China over the coming years, its origin is most likely to be in the Chinese financial system...the experience is that the build-up of financial risks like those seen in China is almost always followed by a marked slowdown in GDP growth or a financial crisis. It is important to point out that these outcomes are not inevitable and that China is able to learn from the experience of other countries, including Australia... one of these concerns is that during the big run-up in debt, a lot of bad loans were made.”
On shadow banks: “Another concern is the growth of the so-called ‘shadow banking’ system... non-bank financing now accounts for 45 per cent of total debt, up from 25 percent a decade ago....the smaller banks have played an important role in the growth of shadow financing. This is evident in the rapid growth of their claims on non-bank financial institutions...the complex web that has developed in China is characterised by opaque risk transfers, implicit guarantees and complex connections.”
China is attempting to deleverage: “At a recent policy meeting convened by President Xi Jinping, the leadership called for a gradual reduction in the debt-to-GDP ratio... these various measures provide a strong signal that the Chinese authorities are serious about addressing the vulnerabilities. Consistent with this, the lower economic growth target for 2018 of 6.5 per cent suggests some tolerance for a gradual slowing in growth.”
 
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The Reserve Bank are watching China: CommSec

The risks and opportunities of our deepening economic ties with China: RBA's Philip Lowe

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Behind mega urban projects often stand strong political wills. Xiong’an is called China’s number-one urban project, and it is <a href="https://www.brookings.edu/opinions/a-brave-new-world-xis-xiongan/" target="_blank">orchestrated by President Xi Jinping.</a>
China is midway through the <a href="https://www.economist.com/news/china/21640396-how-fix-chinese-cities-great-sprawl-china" target="_blank">largest urbanisation process in human history</a>. New cities have mushroomed in recent decades. The most prominent are <a href="https://www.britannica.com/place/Shenzhen" target="_blank">Shenzhen</a> (above) and <a href="https://www.britannica.com/place/Shanghai" target="_blank">Pudong Shanghai</a>, both of which are now major global financial and business centres.
Shenzhen and Pudong Shanghai were credited to Deng Xiaoping. China’s then leader <a href="http://en.people.cn/n3/2017/0403/c90000-9198362" target="_blank">pushed forward the construction of these cities from scratch</a>, to drive his agenda of national reform and opening up to the world.
After his first five-year term as president, it is clear that Xi Jinping’s political ambition is to equal or even surpass the records of Mao Zedong and Deng Xiaoping. Mao and Deng each ruled China for nearly three decades, in person and by selecting their successors.
Xi has proclaimed a “new era”, enthroned his “thoughts”, appointed his allies, and outlined national modernisation goals to 2035 and even as far ahead as 2050.
He also amended the Chinese Constitution to <a href="https://theconversation.com/how-xi-jinpings-lifetime-presidency-could-change-china-for-better-or-worse-92472" target="_blank">remove the two-term restriction</a> on the presidency. This was the final barrier to pursuing power after 2023, when he was due to step down.
What else? Xi needs a new city, with his name imprinted!
<h2>Putting a new city on the map</h2>
There are three mega-city regions in eastern China. Shenzhen is in the <a href="https://www.theguardian.com/cities/2016/may/10/china-pearl-river-delta-then-and-now-photographs" target="_blank">Pearl River Delta</a>, Pudong Shanghai is in the <a href="http://www.scmp.com/comment/insight-opinion/article/1897065/how-economic-dynamism-yangtze-river-delta-flowing-inland" target="_blank">Yangtze River Delta</a>, so Xi’s new city must be in the Beijing-Tianjin-Hebei region.
<a href="https://images.theconversation.com/files/217207/original/file-20180502-153895-1hsieuj.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/217207/original/file-20180502-153895-1hsieuj.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt=""></a>
Xi Jinping’s new mega-city, Xiong’an (the area in red) will be located midway between Beijing, Tianjing and Shijiazhuang (click to enlarge). <a class="source" href="https://www.google.com.au/maps/place/Xiongxian,+Baoding,+Hebei,+China/@39.0206138,115.7617431,9.06z/data=!4m5!3m4!1s0x35efa231eb92fcb5:0xb5dfe3f1103da7ee!8m2!3d38.99455!4d116.10865" target="_blank">Google Maps</a>
Xi selected Xiong’an, an underdeveloped area located centrally between Beijing, Tianjing and Shijiazhuang, the capital city of Hebei Province. Xiong’an has a vast water area, a <a href="https://en.wikipedia.org/wiki/Water_resources_of_China" target="_blank">rare natural endowment in northern China</a>.
Xi <a href="http://www.chinadaily.com.cn/a/201804/02/WS5ac122faa3105cdcf6515949" target="_blank">stressed the principles</a> of “world vision, international standards, Chinese characteristics and high goals” in planning and building Xiong’an. A “<a href="https://www.sciencedirect.com/science/article/pii/S0016718517303196" target="_blank">Millennium Plan</a>” and a “national strategy”, Xiong’an should be different from, or more ambitious than, its predecessor new cities. Shenzhen was created in the 1980s; Pudong Shanghai in the 1990s; Xiong’an should represent a city-making approach with Chinese characteristics in the 21st century.
<h2>What’s the plan?</h2>
On April 21, 2018, China’s official Xinhua News Agency <a href="http://english.xiongan.gov.cn/2018-04/21/c_129855751.htm" target="_blank">released the planning guidelines</a> for Xiong’an. This followed their endorsement by the Central Committee of the Chinese Community Party and the State Council.
These planning documents will guide the development of Xiong’an until 2035 and envision its long-term progress until the middle of this century. This aligns with Xi’s timelines for national modernisation goals.
<iframe src="https://www.youtube.com/embed/l1hXrz1F3Qg?wmode=transparent&amp;start=0" frameborder="0" width="440" height="260"></iframe>
Xiong'an is presented as central to President Xi Jinping’s vision of national development for decades to come.
Key elements of the guidelines are:
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visions: a green, ecological and liveable new area; an innovation-driven development; a demonstration area of coordinated development; and a pioneer in China’s modernisation strategy
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targets: 2035 – basic construction of a high-level socialist modern city that is green, low-carbon, smart, competitive, influential and harmonious with humans and nature; mid-21st century – comprehensive construction complete, a key pillar of the world-class Beijing-Tianjin-Hebei city region
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spatial specifications: green space 70%, development land 30% (a total area of around 530km²), arable land 18% (including permanent farming land 10%), population density 10,000 people/km²
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non-capital city functions transferred from Beijing: universities and research institutions, hospitals and health, finance, advanced services and high-tech industries
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priority industry sectors: new information technology, life and biological sciences, new materials, advanced modern services, and green and ecological agriculture
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transport connectivity: high-speed rail network – 20 minutes to the new Beijing airport, 30 minutes to Beijing and Tianjing, and 60 minutes to Shijiazhuang; expressway network – 60 minutes to Beijing and Tianjing, and 90 minutes to Shijiazhuang; 90% green transport share and 80% public transit share in vehicle transport in the initial development area; exploring intelligent driving and logistics systems.
</li>
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<h2>Can it be done?</h2>
The targets suggest a new city with a population of 5 million erected by 2035 and completed by around 2050. Be mindful: Chinese city plans are normally “conservative” in setting targets.
Is the plan achievable? State ownership of land and a centralised planning system will ensure it happens at a speed and scale hardly paralleled elsewhere. Think of Shenzhen and Pudong Shanghai.
<img src="https://counter.theconversation.com/content/95442/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">However, the most important factor is whether President Xi’s desired political pathway remains on track.
<a href="https://theconversation.com/profiles/richard-hu-7319">Richard Hu</a>, Professor, Faculty of Arts and Design, <a href="http://theconversation.com/institutions/university-of-canberra-865" target="_blank">University of Canberra</a>
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/xiongan-xi-jinpings-new-city-making-machine-turned-on-95442" target="_blank">original article</a>.
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China president Xi Jinping is conducting the largest urbanisation in human history

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<div class="column">China consumer prices rose by 1.8 per cent in the year to April (forecast 1.9 per cent), down from 2.1 per cent in the year to March.</div>
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 Food prices fell 1.9 per cent in April to stand 0.7 per cent higher than a year ago. Non-food prices rose 0.2 per cent to stand 2.1 per cent higher than a year ago.  
China business inflation - producer prices rose by 3.4 per cent in the year to April (forecast 3.5 per cent), up from 3.1 per cent in the year to March. Raw material costs are up 5.7 per cent on the year.
 
 
The Chinese data have implications for the currency markets and therefore exporters and importers.</div>
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<div class="column">What does it all mean?</div>
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 In China, non-food inflation has been comfortably between 2.0-2.5 per cent over the past year. In contrast Australian inflation is still struggling to get into the Reserve Bank’s 2-3 per cent target band. The bottom line is that the Chinese economy is healthy with firm activity levels and sustainable inflation. While costs for businesses are growing at a faster pace above 3 per cent, it will be remain just a watching brief for policymakers.</div>
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<div class="column">It is in Australia’s interests – especially in terms of the budget position – to have a healthy Chinese economy. At present the two largest economies – the US and China – are driving global economic growth. At the same time, a lower Australian dollar and rising energy prices are positive influences on resource sector incomes, and thus exports.</div>
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What do the figures show?
 
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<div class="column">China inflation:</div>
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<div class="column">Consumer prices rose by 1.8 per cent in the year to April (forecast 1.9 per cent), down from 2.1 per cent in the year to March.</div>
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 Consumer prices fell by 0.2 per cent in April after falling by 1.1 per cent in March. Food prices fell 1.9 per cent in April to stand 0.7 per cent higher than a year ago. Non-food prices rose 0.2 per cent to stand 2.1 per cent higher than a year ago.</div>
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<div class="column">Click here <a href="https://www.propertyobserver.com.au/images/2018/5/10/prices.jpg" target="_blank">to enlarge.</a>
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<div class="column">Over the year, food and tobacco prices rose by 1.1 per cent; clothing rose 1.1 per cent; rent, fuel &amp; utilities rose by 2.2 per cent; household goods and appliances rose 1.5 per cent; transport and communications rose 1.1 per cent; education &amp; entertainment rose 2.0 per cent; healthcare rose 5.2 per cent; and other goods and services were up 0.9 per cent.</div>
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<div class="column">Producer prices rose by 3.4 per cent in the year to April (forecast 3.5 per cent), up from 3.1 per cent in the year to March. It was the first lift in the annual rate in seven months.</div>
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<div class="column">Click here <a href="https://www.propertyobserver.com.au/images/2018/5/10/non-food.jpg" target="_blank">to enlarge.</a>
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<div class="column">Over the year, the prices of raw materials were up by 5.7 per cent with the cost of processing up 3.9 per cent. The means of production were up 4.5 per cent with extraction costs up 6.1 per cent.  
Over the year prices of consumer goods rose just 0.1 per cent with consumer durables down 0.6 per cent over the year, “daily use” goods up 0.9 per cent and clothing up just 0.2 per cent.
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<div class="column">What is the importance of the economic data?</div>
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 China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 19th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10th of each month. China is Australia’s largest trading partner and changes in the Chinese economy have major implications for the Aussie economy.</div>
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<div class="column">What are the implications for interest rates and investors?</div>
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<div class="column">Chinese consumer inflation is still well below the broad target for 2018 of “around 3 per cent”. Consumer goods inflation is low with main strength in the services sector, especially healthcare.</div>
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<div class="column">Chinese producer prices are still growing in excess of consumer prices. So policymakers will remain alert, but at this stage there won’t be undue concern.</div>
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<div class="column">CommSec doesn’t expect a change in Australian interest rates in the near term.  
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<div class="column">Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>. </div>
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Chinese inflation data confirms healthy economy: CommSec

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The recent rush of Chinese-backed development in Australia has created inroads for some of the country's architecture firms to also export their design expertise.
DBI Design team has just won the tender to the masterplan of a $3 billion development for a new financial district in Shantou, 300 kilometres north-east of Hong Kong - billed as a new 'micro city'.
The project will include 10 commercial buildings, 16 apartment and residential towers, two hotels , a shopping centre, cultural precinct and marina.
The new micro city will house more than 7,000 permanent residents, accommodate more than 2,000 tourists and support a working population of more than 22,000.
The new community, which is being developed on the 68 hectare site of an abandoned theme park, will be known as the Shantou Overseas Financial Centre.
DBI Design director Raith Anderson says Shantou Overseas Financial Centre is the company's next headline international development, following on from the $1.5 billion Etihad Towers in Abu Dhabi, which was completed in 2012 and has won accolades in the 2011 World Travel Awards and 2012 Emporis World Skyscraper Awards.
It will take about eight years to develop.
"This clearly shows that it is a two way street in terms of Australian-Chinese property development.
"While we have seen a lot of Chinese-led projects in Australia recently, the Chinese are very receptive to high quality design proposals from Australian firms," he said adding China was increasingly moving away from design conformity and embracing creativity.
"It's all about big picture thinking - creating a whole new space where people can live, work and play. While this project is branded a financial centre and the emphasis is on the two signature 380 metre high commercial and hotel towers, the vision is to attract permanent residents and tourists too - it will be a new destination in its own right."
The Shantou Overseas Financial Centre is being developed by  JinFeng Group, a large Guangdong-based private enterprise headquartered in central Hong Kong.
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With a registered capital of RMB200 million and total assets worth over RMB10 billion, the Group’s operations have grown from its core real estate business into diversified areas including construction, tourism, mining and financial investment. 
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Australia's DBI Design overseeing new $3 billion micro city in China

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GUEST OBSERVER
The real estate sector has been a key driver of China’s economic growth in recent years, helping to support the economy during the transition away from growth led by investment in heavy industry towards domestic consumption.
However, this growth has also built a sizeable debt burden which will have to be carefully managed in coming years to avoid a major downturn. 
This is the first of two parts looking into the real estate sector. This part provides a high level view of the importance of the sector and recent trends, while part two will look at the risks related to the sector going forward.
PROPERTY SECTOR A CORE COMPONENT OF CHINA’S ECONOMY
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Private ownership of real estate has a short history in China. Prior to the period of opening up that commenced in 1978, all property was state-owned. Two decades of gradual reforms saw the introduction of ‘commodity houses’ in 1998 – private properties that could be bought and sold at market prices. Chinese residents embraced home ownership – with surveys conducted by Peking University showing that around 90% of households own their home.
The property sector is a critical part of China’s economy, and has been a major driver of growth over the past decade. In 2017, the broad sector (accounting for construction and real estate services) comprised 13.2% of China’s economy – compared with 10.8% a decade earlier, highlighting above average growth over this period. The IMF estimates that when combined with upstream and downstream demand (including cement and steel, along with furniture, electronics and automobiles), real estate drives around a quarter of the Chinese economy.
Similarly, investment in real estate (as a share of GDP) rose sharply from the start of the century – peaking at almost 15% of GDP in 2014, before easing back to 13.3% in 2017. The residential sector accounts for over two-thirds of this total. The trend over this period was supported by the mass migration of Chinese residents from rural areas to cities, as well as a substantial improvement in the quality of housing for existing urban residents.
Property a major part of the economy 
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Real estate’s importance to the financial sector has also increased in recent years. Outstanding loans to real estate have rapidly increased over the past decade – from around RMB 4.8 trillion to over RMB 32 trillion in Q4 2017. This increase has outpaced lending growth to other sectors as well as the broader economy– with real estate lending (as a percentage of GDP) increasing from 18% a decade ago to around 39% at the end of last year. Although this share is not particularly high when compared with advanced economies – particularly Australia (where it is around 90% of GDP) and the United States – its rapid growth poses some concern.
The key contributor to the increase in real estate lending has been residential mortgages – with the mortgage share of total real estate lending rising to 74% in December 2017, up from 63% in December 2007. In addition, the property sector has lured funds from the shadow banking sector (although data on this sector is patchy at best). In Q3 2017, around 10% of funds from the trust sector (one component of shadow banking) were invested in real estate. 
Property loans have grown rapidly 
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Finally, the sector has been extremely important to government balance sheets – with land sales a major source of revenue for the often highly indebted local governments. In 2016, land sales accounted for almost 26% of the total – although this share varies widely across the country. Governments also benefit from tax revenue from the real estate sector – although at present there are no residential property taxes. The sector is also been a major employer – around 27 million people were employed in construction in 2016, with a further 4 million in real estate management, which together accounts for almost 18% of urban employment (and with it income tax revenue). 
Land sales still a major source of funding 
This implies that there are various bodies – both state and private – that benefit from continued growth in construction and property development, despite growing concerns around oversupply once again. This incentive to continue to expand increases risks around China’s economy. 
RECENT TRENDS IN PROPERTY 
China’s previous residential property cycle peaked in April 2014 – following a period of domestic and international concern around potential price bubbles and overbuilding (particularly in so-called ghost cities). Aggregate prices for 70 major cities fell over the next twelve months before the recovery commenced (led by the largest Tier 1 cities – Beijing, Shanghai, Shenzhen and Guangzhou).
During this period, there was a substantial slowdown in investment in the real estate sector – with the rate of growth down from around 15% yoy (on a three month moving average basis) to -0.6% yoy (3mma) by November 2015. This resulted in a drop in construction activity, with residential starts (measured in square metres of floor space) falling considerably between February 2014 and January 2016. These weaker conditions flowed through into the next link in the chain – local government revenues from land sales fell 24% in 2015 on weaker demand from developers. 
PROPERTY PRICES BY TIER - Vast disparities between China’s cities 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/1/CORELOGIC%204.jpg" alt="">
However, investment in real estate recovered in 2016 – as easing property purchase restrictions allied to a credit boom, fiscal stimulus and poor performance in other asset classes supported a fresh surge in property demand and construction activity. Much of the attention was focussed on the extraordinary price increases in tier 1 cities – by September 2016, prices in these locations were 40% above their April 2014 peak – however these cities accounted for just 8% of real estate investment in 2016 (IMF). The majority of investment (59%) occurred in smaller tier 3 and 4 cities (where prices in December 2017 were only 4.0% above the previous peak), where concerns around oversupply have been higher.
This growth provided a major boost to China’s economy in 2016 – at a time where fears of a hard landing were elevated. In real terms, real estate and construction grew by 8.6% and 7.2% respectively in 2016, well above the rest of the economy. 
Growing fears around overheating property markets have seen a tightening in property policies since this time– including higher down payments, restrictions on finance and tighter eligibility for purchases – however these policies have varied across the country. Prices stabilised in tier 1 cities and growth slowed substantially in tier 2 ones. As a result, the strong growth in construction starts and property sales in the first half of 2017 slowed considerably in the second half.
CONCLUSIONS 
We anticipate the slowing trends generally exhibited across the property sector in late 2017 will extend into this year. Slowing sales and softer price trends should flow through into weaker construction activity – which would have downstream effects for steel and cement demand (along with Australian iron ore) and local government revenues (with land sales likely to fall as well). 
Gerard Burg is senior economist - Asia Group Economics at National Australia Bank.
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China's property sector slowing amid growing fears of overheated market: NAB's Gerard Burg

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This year the Chinese Communist Party will tackle some of it’s biggest economic hurdles.
In 2017, we saw the consolidation of China’s power and influence globally, and of Communist Party leader Xi Jinping’s power nationally. This year, the party will try to use this to tackle some of its biggest economic hurdles such as financial risk, environmental pollution and maintaining social cohesion.
A first and overriding priority will be managing and preventing major financial risks within the Chinese economy. China will continue to clean up and tighten controls over its financial sector.
Beijing has already banned risk-laden <a href="https://www.forbes.com/sites/kenrapoza/2017/11/02/cryptocurrency-exchanges-officially-dead-in-china/#79cae9a2a839" target="_blank">Bitcoin from its financial system</a>, and <a href="http://www.xinhuanet.com/english/2017-12/25/c_136851284.htm" target="_blank">the government says</a> it will maintain a “proactive fiscal policy and prudent monetary policy” for 2018.
This is in line with moves earlier in 2017 to curb credit growth and consolidate the country’s <a href="https://www.caixinglobal.com/2017-11-27/financial-regulators-seek-to-tame-chinas-15-trillion-wild-west-101176493" target="_blank">100 trillion yuan (US$15 trillion) financial services asset-management industry</a> under a single regulatory umbrella.
Regulators have also issued <a href="http://www.scmp.com/news/china/economy/article/2124964/china-issues-new-code-conduct-tame-overseas-investors" target="_blank">a 36-point code of conduct</a> for the country’s private enterprises to follow when investing overseas. This is part of a move to clip the wings of China’s most aggressive global deal makers, firms like HNA Group and Fosun International. These businesses responded enthusiastically to the government’s “going out” policy to link China to the rest of the global economy, launched at the beginning of the century.
On the one hand, China has banned investments in gambling and “sensitive” industries and restricted investments in property, hotel, film and sports. But projects linked to China’s ambitious Belt and Road initiative <a href="https://www.bloomberg.com/news/articles/2017-08-18/china-further-limits-overseas-investment-in-push-to-reduce-risk" target="_blank">are actively encouraged</a>. So 2018 should see a continuation of China’s expanding economic influence globally through infrastructure and other major projects.
<a href="https://images.theconversation.com/files/201458/original/file-20180110-48505-14mg7t0.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/201458/original/file-20180110-48505-14mg7t0.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
Beijing’s agenda is clear and the message from the centre is tightly controlled. How Hwee Young/AAP
<h2>Tackling pollution, of all kinds</h2>
In line with the party’s focus on stability and risk minimisation is a clear determination to move away from high-speed growth to high-quality growth. “Quality” here means an economy that is cleaner and more user friendly.
The government is trying to reduce pollution. Measures to close down polluting factories and make local officials more accountable for environmental damage <a href="https://cen.acs.org/articles/95/i26/China-looks-restore-blue-skies" target="_blank">are starting to make a difference</a>.
A major component of the shift to a cleaner economy is China’s determination to free itself <a href="https://www.reuters.com/article/us-china-economy-trade-coal/china-oct-coal-imports-fall-to-21-28-million-tonnes-on-air-pollution-campaign-idUSKBN1D80FG" target="_blank">from any reliance upon carbon imports</a>. This has potentially major implications for the Australian economy, which has done so well over the past few decades largely because of its commodity exports to China.
China is also no longer willing to accept imports of Australian waste, leaving Australia with the question of how else to deal with <a href="https://www.propertyobserver.com.au/http://www.abc.net.au/news/2017-12-10/china-ban-on-foreign-rubbish-leaves-recycling-industry-in-a-mess/9243184" target="_blank">its accumulating stockpiles</a>.
Social stability for economic and political stability
In an unusual move during last year’s annual end-of-year economic convention, the government <a href="http://www.scmp.com/news/china/economy/article/2125135/big-picture-chinas-most-important-economic-meeting-year" target="_blank">detailed concerns from the wider public</a> on issues such as online scams, sex discrimination in the workplace and a lack of kindergarten services in certain regions. This reflects the party’s concern with social cohesion.
Maintaining a harmonious society has long been a concern of China’s leaders. In 2018, the anti-poverty campaign - one of Xi Jinping’s pet projects - will accelerate, with millions of rural poor being relocated <a href="https://www.theguardian.com/world/2018/jan/07/china-move-millions-people-homes-anti-poverty-drive" target="_blank">to new housing with water and power</a>. This will not only boost GDP and economic growth figures, it’s also aimed at promoting support for the party and its leaders.
Chinese leadership’s emphasis on social harmony extends to supporting the party in its policy endeavours. A series of recent measures have been aimed at strengthening party organisations in <a href="https://www.reuters.com/article/us-china-ngos/china-to-strengthen-communist-partys-role-in-non-govt-bodies-idUSKCN10X07C" target="_blank">business and civil society organisations</a>.
In line with existing provisions <a href="http://www.fdi.gov.cn/1800000121_39_4814_0_7" target="_blank">in China’s Company Law</a>, these measures seek to ensure that all organisations in China (local and foreign, commercial and non-profit) make room within the organisation for the operations of a Communist Party cell. This allows the party to monitor and influence the operations of any organisation.
The rolling out of a social credit system is also aimed at monitoring and influencing the behaviour of <a href="http://www.wired.co.uk/article/chinese-government-social-credit-score-privacy-invasion" target="_blank">both organisations and individuals</a>. It operates by awarding social credit points for good social behaviour, whether it be corporate philanthropy or an individual picking up rubbish on the kerbside. It also deducts points for bad behaviour, such as traffic law violations, failing to pay bills on time or domestic violence. There are even <a href="http://www.scmp.com/news/china/economy/article/2095876/new-credit-rating-system-gives-china-big-carrot-even-bigger-stick" target="_blank">“blacklists”</a> for the worst offenders.
Beijing’s agenda is clear and the message from the centre is tightly controlled. But the messiness and the unknowns will lie in its local implementation.
China has always struggled, and always will struggle, with the question of how to balance direction from a central government with local implementation for local circumstances.
For example, a recent decree requiring all local areas to move away from coal fired heating, towards natural gas, hit a snag when thousands of houses and schools were <a href="http://www.scmp.com/news/china/policies-politics/article/2124800/why-chinas-winter-fuel-crisis-cold-hard-lesson-law" target="_blank">left without heating in freezing conditions</a> in northern China. It forced authorities to back-track on implementing the policy.
The key for the government will be to strike a balance between reform and preserving stability. Aggressive reforms will be duly countered by other policies if they are seen as posing risks to economic stability.
<img src="https://counter.theconversation.com/content/89911/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">If successful, China’s reforms will allow its economy to take the lead in adapting to a dynamic world. But the sheer size of its ambitions (both global and local) also contains the risk that failures, if they occur, could have devastating impacts.
<a href="https://theconversation.com/profiles/alice-de-jonge-118840" target="_blank">Alice de Jonge</a>, Senior Lecturer, International Law; Asian Business Law, <a href="http://theconversation.com/institutions/monash-university-1065" target="_blank">Monash University</a>
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/what-we-can-expect-from-chinas-economy-in-2018-89911" target="_blank">original article</a>.
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What we can expect from China's economy in 2018

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<div>
Allianz plans to boost its real estate investment in China, announcing the launch of a $US750 million ($992 million) fund that targets malls in major cities.
The German insurer and asset manager expects outlet shopping in China will continue to grow despite threats from online stores and a slowing economy.
Allianz Real Estate, Allianz's $63.5 billion property investment arm, launched the China-focused fund in partnership with investor TH Real Estate earlier this month.
Allianz will be the anchor investor owning 30 percent of the fund.
"China will become one of the top markets for us in Asia," Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate, told Reuters.
</div>
<div>He expects to grow Allianz's real estate portfolio in China to more than €1 billion ($1.18 billion) over the next 12 months, from about €760 million by the end of this year.</div>
<div> </div>
<div>Last year, the number was €100-150 million.</div>
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"Even if there is a slowdown, China still has 5-6 per cent annual GDP growth, right? In my mind, 5-6 per cent growth is still one of the best growth in the world," Desai said.
He also sees limited threat from China's booming online shopping, saying people don't buy Prada bags via the internet.
</div>
<div>"People are not buying branded products online; people are buying day-to-day stuff online from Alibaba."</div>
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