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

Chinese Investment

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A local developer has paid a reported $32 million for the Everton, Pymble residential development site after a development syndicate of Chinese buyers failed to settle.
The development syndicate blamed capital transfer constraints in China, according to Fairfax Media.
NSW Land &amp; Environment Court approval was secured in July 2016 by BFD Pymble's solicitors, Lin Tang &amp; Co Lawyers for the project.
The site at <a href="https://www.realcommercial.com.au/property-land+development-nsw-pymble-502567694" target="_blank">2-8 Pymble Avenue and 2-4 Everton Street</a> had most of its construction certificate works completed.
<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/2017/11/20/PymbleDev.jpg" alt="">
It has been approved for 98 apartments over three buildings with 156 basement parking spaces.
The design was done by the architects, <a href="http://www.become.com.au/projects/everton-pymble/" target="_blank">Become</a>.
Savills' Neil Cooke marketed the site with colleagues Stuart Cox and Johnathon Broome which attracted interest from around 20 developers.
The property is zoned R4 High Density Residential under the Ku-Ring-Gai LEP 2012 with a height limit ranging between 11.5 and 17.5 metres and a blended FSR of 1:1.
The apartments are expected to come to market early 2018.
 
 
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jchancellor-FAypfDUnLy

Chinese residential developer defaults on Everton, Pymble project

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<div>
Chinese commercial property investors have paused purchasing overseas investments until this November's Chinese National Party Congress provided greater clarity around some of the newly announced capital restrictions.
</div>
<div>
"Post the national congress, it will be interesting to see whether there are any changes to the restrictions to support offshore investment out of China into Australia," CBA executive director real estate, George Vallas told Fairfax Media.
The pause on all investments overseas was addressed during a roadshow by Colliers International, the Commonwealth Bank of Australia and PwC, which toured China in September.
<div>
"Many investors are trying to be good citizens," Colliers International's head of investment services Matthew Meynell said.
"There is a saying among corporates in China – never bet against the Government," Mr Meynell added.
However Singaporean, Hong Kong, Malaysian and Vietnamese investors had re-emerged with interest in Australia.
</div>
<div>
There were a significantly high number of high net worth and institutional investors from these countries attending roadshow presentations.
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<div>"The roadshow reaffirmed our view that there are still significant levels of liquidity to invest in Australia from both institutional and high net worth investors based in Asia," Mr Vallas said.</div>
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j.ballantyne1990-6AQqhLzZaK

Chinese commercial property investors pause overseas acquisition trial

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The Chinese government has put curbs on purchases of real estate and entertainment assets by Chinese companies and investors, a decision which could affect Australia’s real estate market.
The restrictions follows recent moves by Beijing to halt state banks lending to the Dalian Wanda Group, which has recently been forced to restructure its assets in Australia, namely the $2 billion worth of projects in Sydney and the Gold Coast.
The move to check “irrational" overseas investments aim to curb capital outflows and ease the  downward pressure on the yuan, while also compelling mainland companies to align themselves more closely with Beijing's foreign policy objectives, according to The Australian Financial Review.
The new investment guidelines includes a list of "banned, encouraged and restricted" areas for investment.
Hotels, sporting teams, cinemas and the broader entertainment sector were on the restricted list, while investments in casinos and defence technology were banned.
However, the new guidelines encourage deals in high technology, advanced manufacturing, agriculture, some areas of the service sector and oil and gas.
The State Council said it would encourage companies to invest in the $1 trillion One Belt One Road infrastructure initiative, meant to improve China’s trade ties with Europe, Africa, South East Asia and the Middle East.
In a statement, China’s top economic planning agency, The National Development and Reform Commission (NDRC), accused some Chinese companies of "blindly" going overseas.
"This has resulted in operational difficulties and caused significant losses," it said.
The agency was also critical of overseas property deals.
"Some companies have put their investment focus on fields that are not necessarily in the 'real economy', such as the property sector," it said.
"While these investments failed to drive economic growth, they led to increased capital outflows, which could negatively impact China's financial stability."
"This will lead to more rational investments ... after a period of crazy acquisitions at any cost,"  Zhang Yansheng, chief economist at the Beijing-based China Centre for International Economic Exchanges, was quoted as saying by the AFR.
"In the short term there will be fluctuation in China's investment in Australia, but I'm sure over the longer term there will be a steady increase."
Beijing has been worried that an acquisition spree by private entrepreneurs in recent years now threatens the stability of its financial system, if loans extended by from state-owned banks turn bad.
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jonathanchancellor-7SQnKwU6yx

China's new restrictions on overseas investment may hurt Australia's property market

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<img src="https://counter.theconversation.edu.au/content/76310/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Chinese investors are often blamed for Australia’s escalating house prices but a number of factors might mean the demand will drop off in coming years.
A recently released report found investment in residential real estate by the Chinese is slowing. As the gap in rental yields between the two countries closes and house prices increase, Australian residential real estate is beginning to look less attractive. The lifting of restrictions on Chinese urban residential property ownership and personal investment monetary restrictions may also play a part.
China has 1,340 high net worth individuals and 568 billionaires. Their combined net worth is equivalent to Australia’s GDP.
Many Chinese investors have access to both legitimate and hidden income and wealth and seek to invest both in overseas real estate. This is at a time when China is in the grip of its own housing affordability crisis.
Why Australia has seemed attractive
In 2015, Chinese investors ploughed approximately A$6.8 billion into Australian commercial and residential real estate. Current Foreign Investment Review Board (FIRB) policies channel incoming real estate investment funding into new dwellings, creating additional jobs in construction and supporting economic growth.
Though temporary Australian residents may be required to sell older residential property when they leave Australia, many foreign nationals are able to retain, rent out, sell or live in newly constructed dwellings. This is a major draw card for Chinese investment in new residential buildings.
Other pull factors include Australia’s stable financial institutions, compared to China,, well regulated land title system, buoyant real estate market, high capital gains rates in major cities and lower deposit requirements.
Australia’s Foreign Investment Review Board (FIRB) may keep an eye on these factors when considering new foreign investment in the housing market, but it struggles to counteract the push effect of Chinese property law restrictions and investor needs.
Factors in China at play
Conditions in China’s economy and regulatory environment also push Chinese investors to focus on overseas markets. The depreciation of the Chinese currency is a significant force. As this currency is devalued, Chinese investors reconsider what and where they can afford to purchase.
Australia’s rental yields of 2-3% in major cities are twice that of China’s. Legislative changes to residential property investment in China also makes Australia look appealing.
China has a dual property ownership system that segregates rural and urban land ownership systems. Rural cooperatives own the rural land ownership rights. Cooperative members can only sell to other members of the same rural cooperative.
This limits competition for rural land and keeps rural land prices low. But it also means rural land is an unattractive investment choice for Chinese.
Urban land, on the other hand, remains state owned with a 70 year lease system to housing owners. The system limits ownership of urban residential buildings to people with urban registration or those that have lived in and paid taxes in the same urban area for five consecutive years. This situation stops many Chinese from being able to purchase urban residential property.
Between 2011 and 2015, those who did have the appropriate registration were limited to a maximum purchase of two residential properties within their urban area – one property to live in and one as an investment. This limitation still applies in Beijing.
The limitation was put in place to counteract major housing affordability discontent as an increasing number of people were locked out of the housing market. This problem is exacerbated by the 30% deposit requirement on residential real estate purchases. This combination of factors forces many Chinese investors into purchasing properties on China’s black market where ownership is uncertain or seek investment opportunities outside China.
The Chinese State Administration of Foreign Exchange introduced new regulations to tighten the flow of capital from China in November 2016. This agency is tasked with the approval of outgoing overseas payments of more than US$5 million. However, most housing acquisitions in Australia fall below this limit.
From 2017, a new rule was introduced to limit the yearly foreign currency holding to US$50,000 for individual investors..
Larger Chinese development companies operating in Australia are known to sell individual residential units “off the plan” directly to Chinese property investors. Where this is the case, the developer has a vested interest in finding ways to circumvent the new limits on foreign currency holding in order to settle a contract. However, it will take time for developers to adjust their methods.
As house prices increase, rental yields generally fall. This is due to the large amount borrowed by investors compared to what they receive in rental income.
Though rent prices have increased significantly in Melbourne and Sydney, they have not kept pace with house prices. Rental yields have fallen in major cities.
In China, where the rental yield is 1-1.5%, some investors reconsider whether it is worth the effort of renting out their properties. Instead, they rely on the capital gain to create a profit while leaving the property vacant, preventing wear and tear to it. This practice has serious implications for the supply of rental properties in China.
As Australia continues to struggle with escalating house prices and decreasing rental yields, residential real estate investment becomes less attractive as a long term investment for Chinese investors. The reliance on capital gains may result in higher numbers of vacant properties in Australia, counteracting the FIRB’s intentions.
The restrictions enacted by Chinese regulators may slow the flow of money out of China in the short term. However, Chinese investors are likely to find ways to circumvent these restrictions. The lifting of restrictions on Chinese residential property ownership may refocus investment choice location to within China.
Erika Altmann<a href="https://theconversation.com/profiles/erika-altmann-361218"> </a>is qualitative researcher, University of Tasmania and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/erika-altmann-361218">here</a>.
Zhixuan Yang is lecturer in Real Property Development and Management and author for The Conversation.
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Why Chinese investors find Australian real estate so alluring

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A large Chinese pig, poultry and stockfeed company, Shenzhen Kondarl, has told the Shenzhen stock exchange it is close to finalising the purchase of Australia’s biggest avocado farm for as much as a billion Chinese yuan ($192 million).
But Neil Delory, the Australian owner of Jasper Farms at Busselton, Western Australia, stated that no deal had been done.
He confirmed that two of his highly productive avocado farms were being offered to both local and overseas investors through Ernst and Young, but said he was confused by the announcement.
Mr Delory said no memorandum of understanding for the sale had been signed with the Chinese company, and that Australian bidders were still in the race.
It is believed that the announcement may have been a signal to investors that it has permission to spend a billion yuan for purchasing a property or business outside of China.
Such a large farm purchase would also require permission from Australia’s Foreign Investment Review Board.
Mr Delory admits that the announcement especially annoyed him as it has caused confusion for his brother Russell Delroy who has an avocado farm under the trading name Delory Orchards and supplies 25 percent of Coles supermarkets’ avocado demand.
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Owner of WA avocado farm annoyed by Chinese investor's premature announcement

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Asian outbound real estate investment was dominated by Chinese investors in 2016, accounting for almost half – 47 percent or US$28.2 billion - of the total capital transacted during the period, with Sydney among the top five for outbound investment, according to real estate firm CBRE.
CBRE Institutional &amp; International Investments NSW director Michael Andrews said while Australia remained highly sought after by mainland Chinese capital, demand from other Asia markets was also strengthening.
“Chinese investors remain active in deploying capital offshore into the Australian market, with the majority of this targeting residential development sites and/or income producing assets that are capable of being converted to residential,” Andrews said.
“Offshore capital flows continue to strengthen in the Australian market, with new and increasing mandates from existing investors and also emerging capital from markets such as Japan that we haven’t seen for some time.”
While office assets in the core Sydney and Melbourne CBD markets remain strongly sought after, there is also an emerging shift in sentiment towards emerging secondary markets in these locations.
“There is a very strong appetite from global capital for quality office investments. The change we are seeing however is in their growing acceptance of markets outside of the CBD core – such as North Sydney, Parramatta and Macquarie Park in New South Wales, and St Kilda Road in Melbourne,” said Andrews.
For the second consecutive year, CBRE figures reveal that the US remained the most favoured destination for Asian capital, drawing 43% of the overall total, followed by EMEA as the second-favoured at 27 percent.
Pacific attracted 7 percent - or $4.4 billion - of the overall investment turnover, with 53 percent of this injected into the Sydney market.
New York surpassed London as the top metropolitan destination for outbound investment in 2016, however, it contributed to a smaller share compared to 2015. 
The total top five destinations — New York, London, Hong Kong, Seoul and Sydney — contributed to 37 percent of the overall total, a decrease from 42 percent y-o-y, revealing that investment was spread across more diverse destinations. 
Andrews said Asian investors were seeking out assets in more diverse markets, with greater demand emerging for more niche opportunities.
“The shift towards counter cyclical investment is gaining some momentum, with Asian investors showing more willingness to invest in secondary locations in addition to alternative sectors outside of the traditional office assets – such as student housing and healthcare,” Andrews added.
CBRE Global Capital Markets executive director, Yvonne Siew, said outbound investment activity by Asian investors remained robust, with institutional investors continuing to lead investment activity, contributing to six of the top ten biggest outbound deals of the year.
“Despite recent policies by the government restricting Chinese outbound investment, there continues to be a steady flow of Chinese capital overseas as investors seek to diversify their portfolios,” Siew said. 
“With more scrutiny on cross-border capital flows and rigorous checks by the government which may lengthen the approval process, Chinese outbound real estate investment may moderate, gathering at a more sustainable rate.
Instead of larger transactions, Chinese investors may simply opt for a higher number of smaller deals. She said Chinese appetite for global real estate investment will remain solid but more cautious.
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Chinese capital dominated Asian foreign real estate investment in 2016: CBRE

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Chinese internet service portal Tencent has partnered with real estate website Juwai.com to create a new real estate-centric portal for international sales from Chinese residents.
Tencent runs the Chinese equivalent of WhatsApp, Facebook, Spotify, Kindle, and ApplePay. The partnership will see global properties added to the portal.
Juwai.com created the channel, the content and the back-end system. 
Juwai.com chief executive officer Charles Pittar said the alliance between Juwai.com and Tencent means more traffic, more transactions and more brand building in the Chinese market.
"Over the last half decade or more, Chinese consumers have gone from being nearly invisible in international property markets to being the number- one buyers in almost every country and continent," he said.
"This is a great result for Chinese consumers who want to make international investments in an informed way. It's also wonderful for our international clients who want to ensure they are accessing China in a broad and considered way."
Tencent Real Estate general manager Yu Kai said this partnership with Juwai.com will provide users with information on overseas buying, listings, and related services. 
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"Juwai.com is now an important part of our real estate offering. By making Juwai.com's international property content available to Tencent's audience, Chinese consumers will be empowered to make informed investment decisions."
To view the site, <a href="https://haiwai.house.qq.com" target="_blank">click here</a>.
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Chinese property websites go head to head

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<img src="https://counter.theconversation.edu.au/content/69863/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
When it comes to discussions about Chinese real estate investors, we tend to focus on the idea that they are buying up property in places like Australia, pushing up prices – even if that is somewhat questionable.
But it also ignores the other side of the equation. The number of properties built by Chinese developers outside of China has grown significantly, even as residential construction within China slows. 
The expansion of Chinese residential development outside China has impacts on a number of levels, from property prices through to regional diplomacy.
<h2>The shift to Asia</h2>
Country Garden, a property development company based in Guangdong, China, is constructing apartment buildings that would add more than half-a-million homes and house 700,000 people in Johor Bahru, in southern Malaysia. This project goes far beyond constructing apartment buildings, however. It is part of an even bigger project named “Forest City” that Country Garden plans to build on four artificial islands. 
The idea is that Forest City will be equipped with schools, shopping malls, parks, hotels, office buildings and banks. All ensconced in rich greenery, clean water and a quiet transportation system. 
This grand project is just one example of the recent surge of overseas investment by Chinese property developers. Total investment in the Chinese real estate sector was growing at a rate above 10% until 2014, then dropped to less than 1% in 2015. This indicates a significant shift in Chinese real estate investment.
All the while, Chinese investment in the real estate sector overseas has picked up strongly. It has grown from $US0.6 billion in 2009 to US$30 billion in 2015. Several Chinese property developers have identified overseas investment as their main business growth strategy.
<h2>Two reasons for the pivot</h2>
Chinese investors have begun looking offshore for a couple of reasons. 
Chinese buyer demand for overseas properties is growing. Since China reformed its economy and started growing at a fantastic rate, households have accumulated significant wealth. They now want to diversify their investment portfolios, and so are seeking property elsewhere. 
Volatility in domestic housing prices has intensified this trend, despite various government policies aimed at smoothing out price fluctuations. An oversupply of properties in third and fourth-tier cities such as Ordos and Qinhuangdao created “ghost towns” where property isn’t desirable. In first and second-tier cities, however, prices have skyrocketed. House price-to-income ratios of these cities are ranked highest in the world, making it difficult to invest in properties in China.
In recent years there has been a huge expansion of production capacity. In 2015, China produced 51.3% of the cement and 49.5% of the crude steel in the world. As production capacity grows beyond the demand from the domestic market and runs into overcapacity, it is natural that firms will seek returns overseas. 
<h2>The impact of it all</h2>
Taking Country Garden as an example, it is worth noting that the developer is not just building residential property, but designing and constructing the entire infrastructure for a city. Transport, greenery, water and noise control are all being put in place. These are beyond the scope of a conventional property developer. 
Therefore, one potential positive impact of this project is to help boost the quality of infrastructure in Johor Bahru and so nurture more business activities in the future. The economic and geographic relationships between Johor Bahru and neighbouring Singapore may develop into one similar to that between Shenzhen and Hong Kong. 
It is, however, critical that the local government monitors and enforces strict environmental protection and regulation to ensure the project won’t damage the natural environment or disrupt the local market. 
The huge influx of newly built apartments has resulted in the value of residential sales dropping by almost one-third in in Johor Bahru last year. Whether this is a short-run phenomenon and housing prices will rally in the long run depends on whether more business activities and job opportunities can attract population inflow to the city and hence create higher demand for housing. In the short run, the fall in housing prices may lower the cost of living and attract firms and workers into the city.
For the Chinese government, it will be important to nurture more talent with legal and financial expertise to help Chinese property developers go out and invest overseas. This expansion by developers is just one, early facet of China’s new diplomatic efforts to develop infrastructure overseas.
Yixiao Zhou is lecturer in Economics, Curtin University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/yixiao-zhou-320417" target="_blank">here</a>.
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As its economy changes, China is starting to export its real estate ideas too

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<img src="https://counter.theconversation.edu.au/content/69895/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Foreign reserves at the People’s Bank of China (PBoC), China’s central bank, fell for the fifth consecutive month in November, dropping by US$69.1 billion to US$3.1 trillion. This is a level not seen since 2011, with reserves shrinking more than US$500 billion this year alone.
The Chinese government has moved to clamp down on capital flight, by introducing restrictions on foreign investment and curbing gold imports. But it could go further as the yuan stares down its worst year since 2005, making it harder for Chinese companies to borrow and repay debt. 
The decline in China’s foreign reserves is not a blip, but has roots that go deep and could affect the ability of Chinese consumers and companies to be our customers. So the introduction of currency controls, especially if China revisits the quotas for Chinese individuals to spend on foreign goods or travel, is something to watch. 
<h2>Why China is bleeding foreign exchange</h2>
The story goes back to August 2015, when China devalued the yuan in an apparent attempt to boost exports and growth. The devaluation probably would not have drawn so much attention if not for the fact that it appeared to trigger a huge outflow of capital from China. 
It all has to do with historical patterns of borrowing by Chinese companies (and some wealthy individuals). During the boom years of export-and-investment-led economic growth, investing in China offered a good return (especially compared to what was available in Western economies). China’s shadow banking system grew and flourished – offering even greater returns to Chinese firms and individuals. 
At the time it made sense to borrow at near-zero rates in the US and Europe, convert the money to yuan and invest in China. But the Chinese government brought this trade undone when it devalued the yuan back in August 2015. Borrowing in US dollars then selling those dollars to buy yuan-denominated assets no longer works. 
It is now happening in reverse – yuan-denominated assets are being sold at record rates to buy US dollars in order to pay back old loans before it becomes too late. This outward flow of yuan generates downward pressure on the Chinese currency, which recently fell to its lowest levels in years. This is creating a feedback loop. 
Before 2015, the PBoC bought dollars from Chinese companies that earned export income, printing lots of new yuan to do so. This money then circulated within the Chinese banking system and supplied the credit for China’s huge expansion. 
But now the PBoC is selling down its reserves of US dollars to prop up the yuan. This also places pressure on Chinese banks, and may force the PBoC to allow banks to free up more of their available capital. These deteriorating conditions in the banking sector, along with China’s fast-rising private-sector debt, increase the cost of capital and put further pressure on foreign exchange reserves. 
<h2>The economy isn’t helping</h2>
Further adding to the pressure since 2015 has been Chinese government encouragement for local companies to “go global”. Often such investments have been supported by subsidised loans or grants from China’s Export-Import Bank (China Exim Bank). At the same time, foreign investment into China has dwindled as labour and other costs have risen. 
Both of these phenomena have been part of the Chinese government’s overall strategy of internationalisation, while moving away from an economy dependent on exports and towards an economy based much more on services and domestic consumption. The problem is, however, that the hoped-for rise in domestic consumption has not eventuated at anything like the rate necessary. 
A crackdown on luxury consumption – seen as a sign of corruption by senior Communist Party members and officials – has further detracted from the desired growth in domestic consumption. 
<h2>What all this means for us</h2>
Even with the restrictions put in place, there isn’t a total yuan lockdown. It is hard to prevent the movement of yuan out of China through the offshore yuan market. The Chinese banking authorities have fewer ways of preventing such transfers, especially as the government pushes the yuan as an alternative to traditional US dollar settlements. 
But it’s likely China and its people will be much less able to afford direct purchases of Australian goods (iron ore, coal) and services (education, tourism) in the near future. This does not mean that Chinese demand for Australian goods will fall, but things might have to change. 
It means that instead of just “selling stuff” to China, Australia needs to engage with the Chinese economy – to understand what that economy really needs. Australia has know-how and technology in health care, education, agriculture and energy that China needs and wants.
With the limitations of Chinese currency and investment controls, Australia may need to be more generous in its willingness to transfer some of that technology and know-how. For its part, China has to be much better at ensuring that the intellectual property involved in such transfers and the returns from them are properly protected. This could be the start of something brand new.
Alice de Jonge is senior lecturer, International Law; Asian Business Law, Monash University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/alice-de-jonge-118840" target="_blank">here</a>.
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Why capital is fleeing China and what it means for Australia

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Chinese mega developer Poly has bought a development site on Richmond Hill in Melbourne's inner east.
It will develop a luxury townhouse project after the $16 million acquisition.
Poly Real Estate, a Shanghai-listed subsidiary of the $120 billion China Poly Group, is one of China's biggest developers and conglomerates.
The 2047-square metre site is at 150-152 Bridge Road and 1-3 Allowah Terrace.
It was marketed with a townhouse scheme of 41 dwellings.
The Richmond Hill site sold in September last year for $11 million then back on the market prior to settlement.
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