Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

China

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Chinese international real estate website Juwai.com has appointed Carrie Law as chief executive officer and Georg Chmiel as chairman.
Outgoing Chairman Richard Kuo will remain on the Board as a non-executive director.
Carrie Law was most recently a senior international executive with the REA Group and the former general manager of iProperty Group, which the REA Group acquired in February 2016.
Georg Chmiel has served as director and is also chairman of ASX-listed iCar Asia. He was previously managing director of iProperty Group and remained with the company through its integration into the REA Group.
Outgoing Chairman Richard Kuo said Georg and Carrie are the best people to lead the company going forward.
"Both bring a wealth of related experience and success in Asian property technology platform businesses to Juwai.com," he said.
"I don’t believe there is another executive anywhere more capable or more suited to help Juwai.com achieve its strategic goals over the next several years.
"During 2017, the board and executive team have implemented substantial change in the company, including further refining its strategy and business plan, and these two appointments are an essential part of ensuring Juwai.com remains the clear market leader."
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jonathanchancellor-7SQnKwU6yx

Chinese listings portal Juwai.com appoints new CEO and chairman

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Australia received the second-largest share worldwide of capital spent on international real estate by property investors from the People’s Republic of China in 2016, according to figures from Juwai.com.
Chinese spent AU$133.7 billion (US$101.4 billion) on international real estate in 2016, a new report from Juwai.com found.
The report predicts Chinese international property acquisition will be lower in 2017 at around AU$104.5 billion (US$80 billion) but will still rank among the top three years on record.
Sue Jong, Chief of Operations for Juwai.com said this is the first time in history that Chinese buyers acquired more than AU$130 billion of international real estate.
“The 2016 total represents a 25.4 percent increase over 2015 and an 845 percent increase over five years," she said.
"Our forecast suggests 2017 will also be one of the top three years on record.
“In Australia, we see that investment flows have decreased markedly from their peak, while remaining strong by historic standards.
"Capital controls, bank lending standards and foreign buyer taxes have combined to wind back the clock to 2015. 
 “Current trends suggest that Chinese property investment this year will be on par with the levels of 2015, or about AU$105 billion.
"That would make 2017 one of the top two or three years in history. While levels are lower than in 2016, they will still be extremely high by any standard.
“We believe we estimate conservatively.
"When we forecast that Chinese investors will acquire more than AU$2 trillion (US$1.5 trillion) of overseas assets in coming decade or so as they close the underinvestment gap. Up to half this new investment could go to property.
According to the report, the top five countries for Chinese investment by dollar value in 2016 are:
1. United States
2. Australia 3. Hong Kong
4. Canada
5. United Kingdom
Vanessa Rader, Head of Research at Ray White Commercial, said the statistics also show markets such as Canada, which have similar investment drivers to Australia, and the impact government imposed taxes has had.
"This gives us a great insight to what 2017 results may look like for Australia," she said.
 
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Australia reaps second-largest share worldwide of Chinese property investment dollars in 2016

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GUEST OBSERVER
There was little change in most of China’s key monthly indicators in May. ‘Old economy’ measures, such as industrial production and fixed asset investment were flat or slightly higher (in real terms), while real retail sales were marginally weaker.
As we suggested last month, these indicators suggest slightly softer economic conditions in Q2, compared with the relatively strong rate in Q1. Our forecasts remain unchanged, with China’s economy to grow by 6.5% in 2017, before slowing to 6.25% next year and 6.0% in 2019. China’s industrial production grew by 6.5% yoy in May – unchanged from the rate recorded in April. Construction related heavy industrial sectors (such as crude steel and cement ) saw much weaker growth. China’s fixed asset investment recorded slightly weaker growth in May – at around 7.9% yoy (from 8.3% in April). That said, weaker inflation trends for investment goods meant that real fixed asset investment was slightly higher (1.5% in May, up from 0.9% in April). Real estate investment has remained comparatively strong, however we continue to anticipate a slowdown in construction activity this year – given tighter financial and policy constraints – which should flow through to industrial production and demand for Australian commodity exports. China’s trade balance edged slightly higher in May – to US$40.8 billion (from US$38.0 billion in April). Both imports and exports were higher month-on-month (with the increase in exports stronger). Commodity prices have had a major impact on import values (and likely export values as well given producer price trends) – with values likely to slow across the second half of the year – in line with weaker commodity price forecasts. Growth in retail sales was unchanged in May – with nominal sales rising by 10.7% yoy. The uptick in inflation during the month meant that real retail sales were slightly weaker – albeit stronger than the growth across most of 2016. Consumer confidence pushed higher in April – up to 113.4 points (the highest level recorded since June 2007). Chinese monetary policy remained comparatively stable in across May and early June – with the 7 day Shibor trading in a narrow range of just under 9 basis points around the 2.9% mark. This represents around 40 basis points of tightening since the start of the year. Our monetary policy views are unchanged – we believe that the PBoC has a tightening bias, but will be cautious in doing so, in an attempt to manage the risks associated with the country’s high corporate debt levels.
China’s industrial production grew by 6.5% yoy in May – unchanged from the rate recorded in April. This was stronger than market expectations (6.4% in the Bloomberg poll and 6.3% in the Thomson Reuters poll) and higher than the trend seen across much of the past two years.
<a href="https://www.propertyobserver.com.au/images/2017/06/19/3a.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/19/3a.png" width="700" height="474"> Construction related heavy industrial sectors saw much weaker growth – with crude steel output rising by just 1.8% yoy to 72.3 million tonnes (down from record production levels in April), while cement production rose by just 0.5% yoy. In contrast, motor vehicle production was stronger – up by 4.1% yoy in May (compared with 0.3% in April), while growth in electricity output eased to 5.0% yoy (from 5.4% previously). There were mixed trends in China’s main industrial surveys in May. The official NBS PMI survey was unchanged at 51.2 points. In contrast, the Caixin Markit PMI fell further – down to a slightly negative 49.6 points (from 50.3 points in April).
<a href="https://www.propertyobserver.com.au/images/2017/06/19/3b.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/19/3b.png" width="700" height="482">
China’s fixed asset investment recorded slightly weaker growth in May – at around 7.9% yoy (from 8.3% in April). That said, the decline in prices for investment goods probably outpaced the fall in nominal investment – given recent trends in producer prices and commodity markets – meaning that real fixed asset investment has trended slightly higher. Our estimate suggests real investment grew by 1.5% in May, up from 0.9% in April.
<a href="https://www.propertyobserver.com.au/images/2017/06/19/4a.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/19/4a.png" width="700" height="468"> Private sector investment edged slightly higher in May – rising by 6.6% yoy(on a three month moving average basis) – albeit this remains below the growth rate of early 2016 (prior to the plunge mid-year). In contrast, investment by state owned enterprises dipped to 12.2% yoy (3mma), from 13.7% previously. Despite measures designed to cool the sector, investment in real estate has continued to grow strongly – rising by 8.8% yoy (3mma) in May – down from 9.3% last month. Manufacturing investment was slightly stronger – at 5.3% yoy (3mma) from 4.8% previously. Efforts by authorities at central and local levels to control property prices (including larger down payments, higher lending rates and purchasing restrictions) are yet to show widespread results. Month-on-month prices rose by 0.5% for new builds and 0.7% for existing properties in April (both stronger than March) according to NBS data. That said, unofficial data for May (released by the Chinese Academy of Social Sciences) suggests that prices in some key cities – including Beijing and Tianjin – may have fallen in May. New residential construction starts recorded weaker growth in May – at 8.4% yoy (down from 16.6% in April) – although it is unclear if this a slowing trend or merely volatility in the data. On a three month moving average basis, the slowdown was less pronounced – at 15.1% yoy (down from 17.5%). We continue to anticipate a slowdown in construction activity this year – given tighter financial and policy constraints – which should flow through industrial production and demand for Australian commodity exports.
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<img src="https://www.urban.com.au/images/2017/06/19/4b.png" width="700" height="474">
China’s trade balance edged slightly higher in May – to US$40.8 billion (from US$38.0 billion in April). Both imports and exports were higher month-on-month (with the increase in exports stronger). China’s imports were stronger in May – at US$150.2 billion (compared with US$142 billion in April) – with this representing a year-on-year increase of 14.6%. This increase was in part driven by commodity price trends – with the RBA Index of Commodity Prices increasing by 29% yoy in May. This means that import values are likely to slow across the second half of the year – in line with forecasts of weaker commodity price growth.
<a href="https://www.propertyobserver.com.au/images/2017/06/19/5b.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/19/5b.png" width="700" height="491">
 In contrast, the overall volume of imports has increased more modestly. While import values have risen by around 19% in the first five months of the year, our estimate of volumes is just 6.4% higher. Trends continue to diverge when it comes to the import volumes of key commodities. Coal imports recorded strong year-on-year growth – at almost 17% – although the May level was 18% below last November’s peak. The surge in coal imports – particularly across the second half of last year – was driven by government policy that constrained domestic supply, and there remains considerable uncertainty around the longer term – with both domestic demand and supply falling (the latter through enforced mine closures). Crude oil imports rose by 15% yoy in May, while iron ore imports rose by 5.5% yoy – despite iron ore stocks reaching record levels in May (while prices for ore continued to fall). Copper imports fell by 9.3% yoy – a trend evident for the past nine months.
The value of China’s exports rose in May – totalling US$191.0 billion (from US$180 billion in March) – an increase of 8.7% yoy.
<a href="https://www.propertyobserver.com.au/images/2017/06/19/6a.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/19/6a.png" width="700" height="473"> The confidence of exporters has remained relatively flat in recent months – despite the uptick in export values – with the new export orders measure in the NBS PMI survey at 50.7 points in May (up from 50.6 points previously) – below the near five year high of 51.0 points in March. Exports to China’s major trading partners continue to show diverging trends. There was strong growth for the United States – up by 11.7% yoy – and the European Union (9.7% yoy), while exports to other East Asian markets fell by 2.0% yoy. This result continues to be influenced by the historic distortion in Hong Kong-China trade data. Exports to non-Hong Kong Asia rose by 4.1% yoy in May – led by increases in trade with South Korea, Vietnam and Indonesia – while exports to Hong Kong fell by 10.6% yoy. So far this year, there has been a close correlation between the trade values reported by both China and Hong Kong customs – for the first time since 2010. In the first four months of 2017, the total difference between the two totalled RMB 1.9 million, compared with RMB 13.7 billion in the same period of 2016, RMB 12 billion in 2015 and RMB 24.6 billion in 2014. In part this discrepancy reflected capital outflows disguised as trade activity – through methods such as false invoicing – something that Chinese authorities have clamped down on more recently. That said, the overstated historical exports paints a more negative view on current trade data. While Chinese data suggests that exports to Hong Kong fell by over 15% yoy in April, Hong Kong customs data recorded an increase of 4.3% yoy.
Growth in retail sales was unchanged in May – with nominal sales rising by 10.7% yoy. The uptick in inflation (see below) during the month meant that real retail sales were slightly weaker – at around 9.4% yoy (down from 9.7% previously) – although this rate was stronger than the growth recorded across most of 2016.
<a href="https://www.propertyobserver.com.au/images/2017/06/19/7a.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/19/7a.png" width="700" height="483"> Despite real sales dipping below 10% last month, consumer confidence pushed higher in April – up to 113.4 points (the highest level recorded since June 2007). China’s headline inflation edged slightly higher in May – with the Consumer Price Index pushing up to 1.5% yoy (from 1.2% in April). Food prices have continued to contract – contributing to the recent weakness in inflation trends. Aggregate food prices fell by 1.6% yoy in May (compared with 3.5% in April and 4.4% in March). Prices for meat &amp; poultry, eggs and fresh vegetables fell year-on-year – albeit vegetables decline was smaller in May – at 6.3% yoy versus 22% in April. In contrast, the stronger trend for non-food prices has continued, with the index rising by 2.3% yoy in May (compared with 2.4% in April) – more than double the rate recorded a year ago. Fuel prices have been a major contributor, with double digit growth for the past six months (10.2% yoy in May).
<a href="https://www.propertyobserver.com.au/images/2017/06/19/7b.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/19/7b.png" width="700" height="500"> The acceleration in producer prices has already started to slow – with the producer price index increasing by 5.5% yoy in May (down from 6.4% previously). Commodity prices flowing through the industrial sector has a major influence – with growth in the RBA Index of Commodity Prices slowing to 29% yoy in May (compared with 36% in April). The overall index is below late 2016 peaks and has trended lower, meaning that producer price growth is likely to be less significant in coming months.
Credit issuance data was not available at the time of writing. Chinese monetary policy remained comparatively stable in across May and early June – with the 7 day Shibor trading in a narrow range of just under 9 basis points around the 2.9% mark. This represents around 40 basis points of tightening since the start of the year.
<a href="https://www.propertyobserver.com.au/images/2017/06/19/8.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/06/19/8.png" width="700" height="519"> The People’s Bank of China (PBoC) kept the rates for the Standing Lending Facility, Medium Term Lending Facility and 7 day reverse repos on hold during the past month, while it marginally increased liquidity in May (via open market operations) – by around RMB 20 billion (compared with RMB 210 billion in April). Our monetary policy views are unchanged – we believe that the PBoC has a tightening bias, but will be cautious in doing so, in an attempt to manage the risks associated with the country’s high corporate debt levels.
<a href="https://business.nab.com.au/author/gerard-burg/" target="_blank">Gerard Burg</a> is a Senior Economist - Asia at NAB Group Economics
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jchancellor-FAypfDUnLy

China residential construction starts slower: Gerard Burg

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GUEST OBSERVATION
Last month six of Australia’s top journalists <a href="https://news.xinhuanet.com/zgjx/2017-05/18/c_136295296.htm" target="_blank">visited China for a week</a> as guests of the Australia-China Relations Institute (ACRI) at the University of Technology Sydney (UTS).
They were greeted by top Communist Party officials and toured some of China’s new infrastructure projects. Some (but not all) returned to Australia singing the praises of Chinese President Xi Jinping’s showcase “One Belt, One Road” (OBOR) initiative and <a href="https://www.afr.com/brand/chanticleer/opportunities-for-business-in-chinas-one-belt-one-road-20170522-gwaqoo" target="_blank">the opportunities for Australian businesses</a>.
Bob Carr, the director of ACRI and a professor of international relations at UTS, <a href="https://www.smh.com.au/comment/if-australia-listened-to-our-hawks-on-china-wed-have-been-hung-out-to-dry-20170523-gwaw1w" target="_blank">claims we are in danger</a> of being “hung out to dry” if we listen to the “China hawks” and don’t more fully engage with China. Yet few have paused to ask why one of our universities is being used as a conduit to promote China’s national interest, and who is actually paying for it.
China’s rise forces us to think carefully about both the opportunities and costs of a closer relationship with China. These difficult discussions are taking place in government offices, boardrooms and chancelleries around the globe, but must also be a part of the wider public discussion. Australia is no exception. China is our single largest trading partner and an increasingly important source of foreign investment. China is also fundamental to our tertiary education sector.
With federal funding declining, vice-chancellors are being forced to think creatively about new revenue streams. Here China looms large. Nearly <a href="https://grattan.edu.au/the-rising-place-of-deregulated-student-fees-in-australian-university-life/" target="_blank">a fifth of higher education revenue</a> comes from full-fee paying students, with overseas Chinese students contributing the lion’s share. Universities are also looking to China for new sources of research income. Yet the sector’s <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2015-08-31/australian-unis-left-vulnerable-by-reliance-on/6737678" target="_blank">growing dependency on the Chinese market</a> could cloud the judgement of senior university administrators.
The circumstances of the Australia-China Relations Institute should serve as a reminder of what is at stake. ACRI was created in early 2014 around the same time that the university defunded its large China Research Centre and sent its director, the <a href="https://www.propertyobserver.com.au/https://www.sussex.ac.uk/profiles/250674" target="_blank">respected historian Maurizio Marinelli</a> packing. ACRI was founded with A$2.8 million in donations from two wealthy Chinese entrepreneurs who recently migrated to Australia. One of these individuals, <a href="https://www.afr.com/news/politics/chinas-local-emperor-huang-xiangmo-says-politics-just-like-sport-20160901-gr66xc" target="_blank">Mr Huang Xiangmo</a> was named chairman of ACRI and would later reportedly claim that he <a href="https://www.afr.com/news/politics/chinas-local-emperor-huang-xiangmo-says-politics-just-like-sport-20160901-gr66xc" target="_blank">personally selected</a> the former Foreign Minister Bob Carr as the director of the new institute.
Despite claims that it is “an independent, nonpartisan, research think tank,” <a href="https://www.australiachinarelations.org/" target="_blank">ACRI</a> has been plagued by controversy since its establishment. In my opinion, the quality of ACRI’s research output is patchy at best, with far more examples of political advocacy than rigorous, independent research.
While it has produced a <a href="https://theconversation.com/australia-china-relations-institute-responds-to-questions-on-research-and-funding-78803" target="_blank">handful of quality research reports</a> by respected Australian academics, far more effort has gone into the production of often one-sided, decontextualised fact sheets and opinion pieces aimed at promoting what ACRI’s own website asserts is “a positive and optimistic view of Australia-China relations”.
Despite initial claims that ACRI would use “<a href="https://acyd.org.au/partners-2/australia-china-relations-institute-">big data science</a> to illuminate and explore the Australia-China relationship,” it has published a handful of short opinion polls that lack academic rigour. Take for example the one-page, six-question survey, “<a href="https://www.australiachinarelations.org/content/east-china-sea-what-australians-think" target="_blank">East China Sea: What Australians think</a>,” which claims most Australians desire neutrality in this territorial dispute. Yet the survey contains no raw data or details on the methodology employed by UMR Strategic in conducting the survey.
The Australia-China relationship is complicated; if we iron out these complexities we are left with an incomplete and potentially misleading picture.
Most of ACRI’s activities happen behind closed-doors and largely outside the purview of the Australian public. In his capacity as Director of ACRI, Bob Carr frequently meets with visiting Chinese Communist Party officials. These visits are not reflected on ACRI’s website but are widely reported in the Chinese language media.
In 2015, for example, Bob Carr met with <a href="https://world.people.com.cn/n/2015/0916/c1002-27594016" target="_blank">Zhu Weiqun</a>, one of the chief architects of the Communist Party’s efforts to demonise the Dalai Lama and promote the assimilation of ethnic minorities in China. When the Party’s Minister for Propaganda Liu Qibao visited Australia in 2016, Carr participated in a roundtable “dialogue with Sinologists in Australia,” which was <a href="https://www.weibo.com/ttarticle/p/show?id=2309351000443980755138134282" target="_blank">widely reported in the Chinese language media</a> but went unmentioned in Australia.
ACRI has also been busy courting the Australian media. It has organised a number of study tours to China for Australia-based journalists like Paul Kelly, Ross Gittins, Malcolm Farr, Jim Middleton, and at least 12 others, <a href="https://news.xinhuanet.com/zgjx/2017-05/18/c_136295296.htm" target="_blank">according to Chinese media reports</a>. Wider media coverage on China is valuable. Yet by exposing these visiting journalists to the official Party line, it suggests to me that ACRI is seeking to actively reshape the public perception of China by skirting Australia’s China-based journalists who tend to be far more knowledgeable and critical of China.
Returning journalists published fifteen articles in 2016 <a href="https://news.xinhuanet.com/zgjx/2016-08/11/c_135585550.htm" target="_blank">according to the Party-backed All China Journalist Association</a>, thus “objectively transmitting ‘China’s voice’” to the Australian public through mainstream media outlets. This appears to be one of the concrete outcomes of the <a href="https://news.xinhuanet.com/english/2016-05/27/c_135394020.htm" target="_blank">Memorandum of Understanding</a> ACRI signed with the Party’s official Xinhua News Agency in early 2016.
Unlike other university-based think tanks, such as the <a href="https://www.ussc.edu.au/about/mission" target="_blank">United States Studies Centre at the University of Sydney</a>, ACRI has never produced an annual report <a href="https://theconversation.com/australia-china-relations-institute-responds-to-questions-on-research-and-funding-78803" target="_blank">nor does it publicly disclose</a> its budget and financial expenditures. The university now claims to “<a href="https://newsroom.uts.edu.au/news/2017/04/hon-philip-ruddock-chair-australia-china-relations-institute-advisory-board" target="_blank">fully fund</a>” the institute; yet the Bank of China, the China Construction Bank, Yuhu Group, and other Chinese companies are listed as “<a href="https://www.australiachinarelations.org/about-us" target="_blank">Chairman’s Council Members</a>” under a description of how ACRI is funded.
Who is paying for the transmission of “China’s voice” in Australia? Is it UTS, the All-China Journalist Association, Xinhua or even the Propaganda Department of the Chinese Communist Party? Because ACRI hasn’t disclosed any of its finances, we don’t know who is paying for the trips it organises.
These efforts to promote Chinese “soft power” and influence in Australia are understandable. Public diplomacy is a key part of international relations today, and states have long sought to increase their influence globally.
Yet do centres like ACRI belong inside our universities? The University of Technology Sydney is a public institution that is still predominately funded by the Commonwealth government with taxpayers’ dollars. We risk undermining the neutrality and impartiality of our universities at a time when our relationship with China is reaching a critical juncture.
ACRI’s founding chairman <a href="https://www.smh.com.au/national/chinese-king-of-the-mountain-brush-with-corruption-scandal-20160224-gn2tvt" target="_blank">Huang Xiangmo</a> is actively involved in Australian politics. He has reportedly funnelled over one million dollars in political donations to the major political parties since arriving in Australia under suspicious circumstances in 2011.
His payment of Sam Dastyari’s legal bills stirred controversy over the influence of Chinese money in Australian politics and resulted in Mr Huang’s decision to <a href="https://www.theaustralian.com.au/higher-education/china-steps-up-university-influence-effort/news-story/5d09f3cc5d36e4d7295ae1d85543a023" target="_blank">step down as chairman of ACRI</a>. Yet he <a href="https://www.acpprc.org.au/schinese/jinqi/2017/wen4May17" target="_blank">continues to employ the title</a> and his adjunct professorship at UTS when representing himself in the Chinese language media, where he <a href="https://australia.people.com.cn/n/2015/0710/c364496-27284429" target="_blank">frequently praises the contributions</a> of overseas Chinese in upholding national unity and striving for the “China dream” of national rejuvenation.
Mr. Huang is also the Chairman of the <a href="https://www.acpprc.org.au/schinese/huizhang.asp" target="_blank">Australian Council for the Promotion of Peaceful Reunification of China (ACPPRC)</a>, an overseas branch of the Communist Party’s United Front Work Department, which is tasked with promoting the Party’s interests among the Chinese diaspora. When Li Keqiang visited Australia in March, the <a href="https://www.smh.com.au/nsw/huang-xiangmos-prochina-group-denies-organising-premier-li-rentacrowd-20170324-gv5z4h" target="_blank">ACPPRC mobilised Chinese students</a> to welcome the Chinese Premier and keep any protesters at bay.
Huang Xiangmo has also provided A$3.5 million to help establish a new <a href="https://www.westernsydney.edu.au/aciac/people" target="_blank">Australia-China Institute for Arts and Culture</a> at Western Sydney University, where he sits on the board of governance. He is reported to be eyeing-off <a href="https://www.afr.com/news/politics/chinas-local-emperor-huang-xiangmo-says-politics-just-like-sport-20160901-gr66xc" target="_blank">additional investments</a> in the tertiary sector in Australia. Yet these supposedly philanthropic donations come with a clear agenda, as Huang revealed when he called for the Chinese community to increase their skill and leverage in the Australian political arena <a href="https://www.globaltimes.cn/content/1003731.shtml" target="_blank">in a Global Times editorial</a>.
I welcome the role ACRI is playing in broadening and deepening our understanding of this important bilateral relationship; yet I question whether our publicly funded universities are the right place for the institute.
Universities are meant to be places of robust and critically minded teaching and research. If Australia is going to successfully navigate its way through the “Asian Century,” we need independent centres of research excellence on China.
We need places where properly trained experts can study and better understand all aspects of China’s rise — both the positive and the negative — without fear or influence. We do a disservice to this important mission when the reputations of our universities are sullied in the name of one-sided, political advocacy.
<hr>
The Conversation sought a response from the Australia-China Relations Institute, which can be <a href="https://theconversation.com/australia-china-relations-institute-responds-to-questions-on-research-and-funding-78803">viewed here</a>. 
James Leibold is Associate Professor of Politics and Asian Studies, <a href="https://theconversation.com/institutions/la-trobe-university-842" target="_blank">La Trobe University</a>
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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j.ballantyne1990-6AQqhLzZaK

The Australia-China Relations Institute doesn’t belong at UTS

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Housing price growth in China’s tier-1 cities has slowed down slightly and the pace shows a passing of the baton from the centre to the regions, says Westpac’s latest China Property Update.
The 70-city house price update for the month of April highlights authorities’ tight management of the sector. 
Tier-1 city price growth continues to be reined in as price growth is sustained elsewhere. In April, the number of cities reporting price gains fell to 58 from 62 for new housing and to 61 from 64 for the established market. 
Both results are toward the upper end of the range seen over the past year, signalling price gains remain broad across the nation, said Westpac. Across the three tiers, the pace of annual price growth clearly shows a passing of the baton from the centre to the regions. 
<img src="https://www.urban.com.au/images/2017/05/19/westpac1.png" alt="">
Over the past year, annual price growth for new housing in tier-1 has decelerated from 31% per year a year ago to 14% year (17% year for established housing). 
“Whereas Shenzhen initially provided all of the impetus to this slowdown, now all of the tier-1 cities are experiencing decelerating price growth,” said report author Elliot Clarke.
However, Shenzhen has still (by far) seen the largest decline, from 62% year in April 2016 to 6% year currently. 
<img src="https://www.urban.com.au/images/2017/05/19/westpac2.png" alt=""> 
<img src="https://www.urban.com.au/images/2017/05/19/westpac3.png" alt="">
Growth in Tier-2 also slowed down, though on a much more modest level. Growth fell from 12% year in November to 10% year for new builds, while it fell to 8% per year to 10% in October for the established market. 
In contrast, price growth for tier-3 cities has held up, with annual growth currently around 9% yr for new homes and 7%yr for existing. 
Westpac noted that around a year ago, annual growth for this sub-set of cities was just 2% yr. From the above price trends, it is best to conclude that the actions of authorities have spread investor activity more broadly rather than halting it outright. 
This is most obvious in the opposing price trends for tier-1 and tier-3 cities – the latter’s’ frequent geographic proximity to the former combined with rapidly improving transport infrastructure arguably sparking growing investor interest. 
While growth in housing starts is modest, developers continued strong appetite for land suggests they remain optimistic on the outlook for the sector. 
“That said, they are likely to manage the supply of new housing to match demand and see moderate price growth (which doesn’t raise the ire of authorities) sustained,” said Westpac’s note. 
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Housing price growth in China's cities edges down: Westpac 

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GUEST OBSERVER
Suspicion of Chinese corporations investing in Australia is not well justified when you consider the growth of private enterprise in China and the state of the Chinese Communist Party.
The fierce public debate about Chinese corporations investing in Australia is spurred by several misleading ideas about how much control the Chinese government has and its intervention with private businesses. 
The fact is, massive privatisation has been ongoing in China since the 1980s, involving millions of business enterprises. Currently around 70 percent of Chinese industrial output is now produced by non-state controlled business firms, and over 80 percent of the industrial workforce in China is now employed in the private sector. 
Private enterprises have been the growth engine of the Chinese economy, providing 95 percent of the growth of the urban workforce in the past three decades, and many now compete with state-owned conglomerates for brand recognition and size. Inevitably, private firms have started expanding overseas to find new markets and diversify their investments.
A common claim is that despite many Chinese investors being private corporations, they are still effectively controlled by the governmentthrough the Chinese Communist Party.
It’s true that if there are more than three party members within any organisation in China, those members have the right to set up a Communist Party branch. This includes employees of private corporations, and there are currently party branches within approximately 13 percent of private Chinese firms, a figure which rises to 53.1% among larger private firms. 
But this does not necessarily result in party control over those corporations’ business decisions. Li Zhangzhu, the Deputy Secretary of the Chinese Communist Party branch within Yuanfang Group, a large private firm based in Henan Province, declared:
"What the boss of a private enterprise cares about most is business results. The boss will only pay attention to and support [Chinese Communist Party] building if it helps to promote the growth of the business and increases profits."
Academic Bruce Dickson found that attempts to build the Communist Party’s presence in the private sector actually promoted private business interests rather than those of the party’s leadership. 
The Communist Party simply cannot afford to alienate private entrepreneurs because it relies on them to deliver continuing economic growth and provide employment. Without this the party would lose its legitimacy and power. 
A recent survey of several hundred private Chinese corporations by Fan Xia of Shandong University found that if there was a time conflict between an activity scheduled by the firm’s Communist Party branch and their regular work duties, 91.8% of CCP members in private firms would not participate in the party activity unless their CEO gave them permission. 
Another assumption is that the party and the central government control Chinese society with an iron fist). In fact, there is plenty of evidence of massive corruption and policy divisions that cast doubt on whether the party can even control itself. 
In the current anti-corruption campaign, more than 447,000 Communist Party officials have been investigated since 2012, with over 230,000 of these criminally prosecuted in the courts, ranging from the lowest level apparatchiks right up to politburo (policy-making) members, Supreme People’s Court justices and military generals.
Some senior Communist Party officials have been convicted for accepting bribes totalling tens of millions of dollars, according to Chineseand Western media sources.
Many of these bribes were paid in return for promotions within the Party hierarchy or government bodies. For instance, 45 representatives were expelled from the National People’s Congress in September 2016, after evidence emerged that they had used bribery to obtain their nominations; and 454 delegates (out of 612) were expelled from the Liaoning Provincial People’s Congress for similar reasons. 
Research suggests that the party has lost control over its own personnel system and cannot guarantee that its officials are competent or honest. It also explains why a government communique in 2016 referred to many “dangers” that may threaten the very existence of the party, “including the slacking of officials, incompetence, isolation from the people and corruption”.
Contrary to the popular misconception that China is a highly centralised state, few laws and policies are enforced in a uniform way throughout the country. 
For example, in Shenzhen, a Southern Chinese city with over 10 million people, half the buildings within the city have no legal titles and have been rented or sold to millions of people illegally. Relying on the illegal private housing market was the only way for the local government to provide sufficient housing for the millions of migrants arriving in Shenzhen from other parts of China over the past three decades.
This example of decentralised decision-making also counters another assumption about large-scale investment by private Chinese firms in Australia - that it’s part of a “unified” Chinese government strategy to undermine our national security. 
In fact, outward foreign investment from China has become increasingly decentralised, so that the vast majority of investments under US$1 billion are now approved at provincial or municipal government levels. There is also a lot of competition between different Chinese regions and provinces in seeking the economic benefits of investment overseas. 
There needs to be more acknowledgement of the complexity of the influences at play within Chinese corporations rather than just jumping to the conclusion that all are controlled by the Chinese government. Especially if these businesses are bringing economic benefits by investing in Australian businesses and infrastructure.
Colin Hawes is associate professor, University of Technology Sydney and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/colin-hawes-111743" target="_blank">here</a>.
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China’s private companies are unjustly labeled as Communist Party plants: Colin Hawes

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2016 was a watershed moment for China’s commercial real estate market, heralding the next phase of its transformation into one of the major global destinations for property investors and developers, according to Real Capital Analytics.
While development remains a prominent feature of its property market, higher deal volumes for standing assets are a sign of the maturity and depth of China’s investment market.
The confidence of Chinese developers has risen yet again.
The historic peak of land sales by volume was 2013 and 2016 came close second with $417.5b (RMB 2.8t) transacted.
In line with the growing demand, land prices have spiked.
<a href="https://www.propertyobserver.com.au/images/2017/02/08/Screen%20Shot%202017-02-08%20at%201.27.05%20pm.jpg" target="_blank">Click to enlarge</a>
<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/2017/02/08/Screen%20Shot%202017-02-08%20at%201.27.05%20pm.jpg" alt="">
The sharp price growth has been particularly obvious in Tier 1 cities with 19% growth since 2013.
Land values in Tier 1.5 and 2 cities have risen significantly too, by 61% and 49%, respectively.
China became the Asia Pacific region’s largest investment market for income-producing real estate for the first time, overtaking Japan and Australia.
This is a very prominent milestone in the development of the Chinese real estate market.
As highlighted earlier in the report, a total of $36.5b of real estate, excluding development sites, changed hands in China in 2016.
<a href="https://www.propertyobserver.com.au/images/2017/02/08/Screen%20Shot%202017-02-08%20at%201.27.13%20pm.jpg" target="_blank">Click to enlarge</a>
<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/2017/02/08/Screen%20Shot%202017-02-08%20at%201.27.13%20pm.jpg" alt="">
China also claimed another record in 2016 as the Asia Pacific region’s top destination for foreign investors, who completed $10.2b of transactions there last year.
The value of transactions by foreign investors has doubled over the last five years.
The largest foreign investment in China, as well as the largest single asset office transaction in the world, was ARA AM’s purchase of Shanghai Century Link for $3.0b in Q4’16.
Another facet of China’s robust growth is the expansion of Chinese real estate investors and developers abroad.
RCA data shows that $34.7b was invested abroad by Chinese investors in 2016.
This is 245% above the 10-year average and 51% higher than 2015.
However, the strong growth does not come without its challenges.
<a href="https://www.propertyobserver.com.au/images/2017/02/08/Screen%20Shot%202017-02-08%20at%201.27.21%20pm.jpg" target="_blank">Click to enlarge</a>
<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/2017/02/08/Screen%20Shot%202017-02-08%20at%201.27.21%20pm.jpg" alt="">
Speculation about new capital control rules squeezing the pipeline of Chinese outbound capital is causing some concern among market participants both in China and internationally.
It is reasonable to expect that Chinese outbound capital will slow down somewhat in 2017.
Still, investment and development activity within China’s borders is set to stride into 2017 and beyond.
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China's real estate market continues to mature as confidence rises

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China became the Asia Pacific region’s largest investment market for income-earning real estate for the first time in 2016.
Analysis by Real Capital Analytics (RCA) showed that an increasing number of transactions in its second tier cities, plus strong inflows from regional and global investors, powered China to the top spot over Japan and Australia by transaction volumes.
A total of US$14.0 billion (RMB 95.2 billion) in value of real estate, excluding development sites, changed hands in China in the fourth quarter, RCA data revealed.
This was a 32% increase from the same period a year earlier and lifted total investment value for all of 2016 in China by 10% to US$36.5 billion (RMB 243.3 billion).
Deals in existing properties more than doubled in Chongqing, Tianjin and Hangzhou, propelling these three cities into Asia Pacific’s 25 top investment destinations, some for the first time.
Petra Blazkova, RCA’s Senior Director of Analytics for Asia Pacific, said: “This is a watershed moment for China’s commercial real estate market, heralding the next phase of its transformation into one of the world’s major destinations for global property investors.
While development of new sites remains a prominent feature of its property market, higher deal volumes for standing assets in cities other than Shanghai, Beijing and Shenzhen are a sign of the growing maturity and depth of China’s investment market.”
<a href="https://www.propertyobserver.com.au/images/2017/02/08/Screen%20Shot%202017-02-08%20at%208.58.27%20am.jpg" target="_blank">Click to enlarge</a>
<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/2017/02/08/Screen%20Shot%202017-02-08%20at%208.58.27%20am.jpg" alt="">
China also claimed another record first in 2016 as Asia Pacific’s top destination for foreign investors, who completed US$10.2 billion (RMB 68.0 billion) of property deals there last year.
The total value of transactions by foreign investors has tripled since the 2009 Global Financial Crisis.
The largest foreign investment in China in 2016 was the US$3.0 billion (RMB 20.0 billion) sale of Shanghai Century Link to ARA Asset Management.
In Hong Kong, a market highly influenced by Mainland Chinese investments, overall investment volumes reached US$13.5 billion (HKD 105.2 billion) in 2016, a 15% increase year-on-year (YoY).
Notable transactions that drove this increase included the sale of Mass Mutual Tower and Dah Sing Financial Centre, both for over US$1.0 billion.
In spite of the stronger performance by China and most other Asian markets in 2016, overall investment in the Asia Pacific region fell by 14% YoY to US$132.5 billion on the weakness of the Japanese and Australian markets.
Overall investment volumes in Japan stood at US$29.0 billion (JPY 3.2 trillion) for 2016, a decline of 37% YoY that meant it slipped into second place behind China for the first time.
Third-ranked Australia suffered a drop of 32% YoY in the value of completed transactions to US$22.8 billion (AUD 30.6 billion) last year.
RCA’s analysis showed that listed real estate investment trusts (REITs), a traditional driver of transactions in these two markets, slowed their investments significantly after several years of domestic domination due to their access to cheaper capital.
<a href="https://www.propertyobserver.com.au/images/2017/02/08/Screen%20Shot%202017-02-08%20at%208.58.54%20am.jpg" target="_blank">Click to enlarge</a>
<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/2017/02/08/Screen%20Shot%202017-02-08%20at%208.58.54%20am.jpg" alt="">
RCA’s Blazkova commented: “Pricing in both Japan and Australia seems sharp by historical comparison causing these two markets to slow considerably.
A heavy weight of capital continues to search for opportunities, with a strong focus on the safest and largest markets and a buy-and-hold attitude. This combination has created a highly competitive environment for the best assets.”
Barring Japan and Australia, a number of key markets in the region continued to do well.
One such bright spot was South Korea, where investment volumes in the country rose 15% YoY to US$12.0 billion (KRW 13.7 trillion), driven by healthy domestic and foreign demand.
Last year was also the second strongest year for cross-border investment in South Korea recorded by RCA, with the most notable deal being the purchase of Seoul IFC by Brookfield Asset Management in a joint venture with China Investment Corporation (CIC) for US$2.2 billion (KRW 2.5 trillion).
Singapore also had a strong showing in 2016, posting a 38% year-on-year increase in investment volumes last year to US$8.0 billion (SGD 11.0 billion).
This was mainly due to the US$2.6 billion (SGD 3.4 billion) sale of Asia Square Tower 1.
The transaction boosted confidence, as investors returned to the market in the fourth quarter of 2016 in anticipation of rental growth and rising property values.
Blazkova from RCA said: “There has been much talk about investors turning to smaller markets in Asia Pacific as a source of value-for-money opportunities.
Our analysis suggests, however, that for so-called frontier markets like the Philippines, Indonesia and Vietnam, there is still a stand-off in pricing expectations that is preventing investment from really taking off.”
The Asia Pacific Capital Trends report also revealed:
<ul>
<li>The largest single transaction in 2016 was the US$3.0 billion (RMB 20.0 billion) purchase of Shanghai Century Link in China by ARA Asset Management.  </li>
<li>A new peak was reached in terms of the number of megadeals (over US$1.0 billion) done in Asia Pacific last year at 51, with the continued deployment and abundance of capital.  </li>
<li>In terms of market activity by cities, Seoul was the biggest surprise of 2016, having jumped from 10th position in 2015 to 4th last year on record high investment activity, especially in the office and hotel sectors.</li>
</ul>
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China leapfrogs Japan and Australia to become APAC’s largest commercial real estate investment market

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Nearly 40 percent in value of residential development sites were purchased by Chinese developers and investors in 2016 according to a report by Knight Frank.
The figure is up 12 percent in comparison with 2015 and up by 36 percent from 2012.
The report, The Rise of Chinese Developers in Australia – Market Insight: January 2017 found Chinese developers and investors purchased $2.4 billion worth of Australian residential development sites in 2016, some 9.4 percent percent stronger than 2016.
Michelle Ciesielski, Knight Frank's head of residential research, Australia said despite overall total sales falling during 2016, and sales to Chinese developers and investors still being 11.2 percent lower than the market peak recorded in 2014, their influence has grown.
"Chinese developers and investors purchased AUD2.4 billion worth of residential development sites last year. Of these, the average residential development site had an area of 21,045 square metres – increasing more than 18 times from 2012 – and averaged a potential 502 dwellings per development site," she said.  
“While the Australian residential market collectively strengthened throughout 2012 and in 2013, growth in sales turnover encouraged prices to rise for local developers and investors alike.   
“At this time, the Australian dollar became very favourable against other currencies for investment into Australia. The Chinese renminbi was no exception.  
“Opportunistic developers, many for the first time, considered Australia to build their next development after becoming a household name in homeland China. It was considered, and still is to some extent, worth the risk to build a first-time signature development (even if profitability resulted to just be break-even) to be accepted as a reputable developer by the local Australian market.  
 “In the past three years, Chinese developers and investors accounted for over 25 percent of disclosed total sales each year – with 2016 recording a share of sales as high as 38 percent.  
“Long-term strategies must now be devised to allow for the Chinese government tightening the ease of outbound capital flow, and local lenders limiting funding to control their liquidity and satisfy APRA requirements.
"But one thing is clear – Chinese developers are determined to succeed in Australia, and for many generations to come."
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38 percent of Australian residential development sites purchased by Chinese in 2016

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Chatswood in Sydney tops the list of suburbs popular with Chinese buyers, followed by Point Cook in outer Melbourne after a survey of searches on the realesate.com.au website.
Rowville on Melbourne's outskirts cames in third place with the recent favourite Glen Waverley coming in sixth place.
The realestate.com.au website calculated the number of searches to each suburb on realestate.com.au/buy and their Chinese-language site myfun.com from outside Australia from 1 July 2016 – 31 December 2016, based on a user’s IP address.
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="23">
 
</td>
<td valign="top" width="126">
Suburb
</td>
<td valign="top" width="113">
Number of searches
</td>
<td valign="top" width="78">
Median Price
</td>
</tr>
<tr>
<td valign="top" width="23">
1
</td>
<td valign="top" width="126">
Chatswood (NSW)
</td>
<td valign="top" width="113">
More than 1880
</td>
<td valign="top" width="78">
$2,300,000
</td>
</tr>
<tr>
<td valign="top" width="23">
2
</td>
<td valign="top" width="126">
Point Cook (VIC)
</td>
<td valign="top" width="113">
More than 1790
</td>
<td valign="top" width="78">
$538,000
</td>
</tr>
<tr>
<td valign="top" width="23">
3
</td>
<td valign="top" width="126">
Rowville (VIC)
</td>
<td valign="top" width="113">
More than 1670
</td>
<td valign="top" width="78">
$760,000
</td>
</tr>
<tr>
<td valign="top" width="23">
4
</td>
<td valign="top" width="126">
Epping (NSW)
</td>
<td valign="top" width="113">
More than 1410
</td>
<td valign="top" width="78">
$1,724,000
</td>
</tr>
<tr>
<td valign="top" width="23">
5
</td>
<td valign="top" width="126">
Carlingford (NSW)
</td>
<td valign="top" width="113">
More than 1400
</td>
<td valign="top" width="78">
$1,332,500
</td>
</tr>
<tr>
<td valign="top" width="23">
6
</td>
<td valign="top" width="126">
Glen Waverley (VIC)
</td>
<td valign="top" width="113">
More than 1400
</td>
<td valign="top" width="78">
$1,202,000
</td>
</tr>
<tr>
<td valign="top" width="23">
7
</td>
<td valign="top" width="126">
Doncaster (VIC)
</td>
<td valign="top" width="113">
More than 1250
</td>
<td valign="top" width="78">
$1,202,500
</td>
</tr>
<tr>
<td valign="top" width="23">
8
</td>
<td valign="top" width="126">
Mount Waverley (VIC)
</td>
<td valign="top" width="113">
More than 1040
</td>
<td valign="top" width="78">
$1,240,000
</td>
</tr>
<tr>
<td valign="top" width="23">
9
</td>
<td valign="top" width="126">
Balwyn (VIC)
</td>
<td valign="top" width="113">
More than 970
</td>
<td valign="top" width="78">
$2,065,000
</td>
</tr>
<tr>
<td valign="top" width="23">
10
</td>
<td valign="top" width="126">
Ringwood (VIC)
</td>
<td valign="top" width="113">
More than 960
</td>
<td valign="top" width="78">
$807,500
</td>
</tr>
</tbody></table>
The data shows that Chinese buyers are interested in suburbs in Sydney and Melbourne that range in price from $538,000 to $2.3 million.
The REA Group chief economist Nerida Conisbee noted Point Cook, an outer western suburb of Melbourne, was the most affordable on the list.
"This reflects the growing diversity in housing stock being demanded by Chinese buyers. 
“Whereas previously the apartment market in Melbourne and Sydney was most preferred, they are now branching into more affordable locations and into house and land,” she noted.
Chatswood has knocked historical favourite Glen Waverley off the top of the popularity list for Chinese property seekers. 
In 2015, suburbs like Rose Bay and Darlinghurst topped the list of sought-after areas for Chinese buyers, followed by Merrylands and West Ryde.
Rowville was number five in 2015 is now at number three and Ringwood makes its debut this year at number 10.
A four bedroom house at <a href="https://www.realestate.com.au/property-house-nsw-chatswood-124589134" target="_blank">9 Baldry Street, </a>Chatswood (above) has been listed for sale.
Similarly a four bedroom house at <a href="https://www.realestate.com.au/property-house-nsw-chatswood-124495754" target="_blank">34 Dalrympie Avenue</a>, Chatswood (below) has been listed for sale for $1,850,000.
<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/2017/01/29/34%20Dalrymple%20Avenue.jpg" alt="">
A three bedroom house at <a href="https://www.realestate.com.au/sold/property-house-nsw-chatswood-124103070" target="_blank">10 Bertram Street</a>, Chatswood (below) was sold for $2,720,000.
<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/2017/01/29/10%20Bertram%20Street.jpg" alt="">
Similarly a three bedroom house at <a href="https://www.realestate.com.au/sold/property-house-nsw-chatswood-124132842" target="_blank">7 Spencer Place</a>, Chatswood (below) was sold for $2,450,000.
<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/2017/01/29/7%20Spencer%20Place.jpg" alt="">
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