Morning Briefing: Short-term lull won't sway Chinese interest in Aussie properties

Property experts have said the pace of Chinese investing in Australian property will slow... Chinese millionaires snub Australian stocks-for-visa program...

Short-term lull won't sway Chinese interest in Aussie properties 
Property experts have said the pace of Chinese investing in Australian property will slow but the number who invest will remain steady, according to the Australian Financial Review. 

"They are taking stock but they are not putting the brakes on. It is simply a deferral – a "wait and see"," Savills Hong Kong's senior director Simon Smith said.

"It's not a long-term trend. They certainly grabbed the opportunities when they were there, but there are limits."

He said the factors causing the Chinese to rethink when the best time is to invest in Australia are structural changes and slowdown in the Chinese economy, Beijing's tough stance on corruption and capital control, and fewer cheap deals.

A recent note by Credit Suisse's analysts said there had been a fall in Chinese demand for global property, including Australia.

JLL Hong Kong's head of research Denis Ma disagreed. "Investments will moderate not fall." 

"When Hong Kong imposed a 15 per cent transaction tax on foreign investments, it did not deter the Chinese."

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Chinese millionaires snub Australian stocks-for-visa program 
(Bloomberg) -- Chinese millionaires, who happily invested in Australian bonds and real estate to get residency visas, are turning up their noses at small-cap stocks.

Just 19 people have sought permits since Australia overhauled requirements for its investor visas in July by forcing applicants to put at least A$1.5 million ($1.1 million) of the A$5 million they need to spend in the country into smaller equities and another chunk into venture capital. The old system, which was in place since 2012 and drew more than 1,600 applicants primarily from China, let them choose low-risk government debt or popular property investments. 

The developments are frustrating fund managers who were hoping for an influx of cash. Australian small-company shares are less volatile and much cheaper than their equivalents in China, which have been at the center of a stock boom and $5 trillion bust.

“It’s been a slow start,” Douglas Loh, the Melbourne-based head of equities at Acorn Capital Ltd., which oversees about A$600 million, said in a phone interview. “The bottom line is that SIV applicants want to be able to get permanent residency in Australia. They are not really looking to make a lot of money from the equity investment, but rather to protect their capital.”

Millionaire migrants, almost all from China, plowed A$3.8 billion into Australian assets since the government created the visa category in 2012. UBS Group AG, Eight Investment Partners and Acorn Capital are among firms with new small-cap equity funds to cater for the anticipated demand.

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