Why Australian homes are now top target in world for Asian investors

Australia has this year turned into the “focal point” for a global surge in spending from Asia-based investors, a new study shows.

Australia has become the most popular destination for Asian real estate investors to sink their money – despite recent government moves to apply stricter controls on foreign purchasers.

A report released Monday from global real estate technology group Juwai IQI declared Australia the “focal point” for a post-pandemic surge in cross border transactions from Asia-based buyers.

This meant Australia surpassed the United States and Canada as the most sought-after market for buyer inquiries.

The country’s large intake of migrants helped put it on the radar of international investors, the report said.

It comes as Foreign Investment Review Board figures showed Asia-based investors without resident status in Australia spent $5.1 billion on real estate Down Under in the first nine months of 2023.

China's President Xi Jinping talks with Australia's Prime Minister Anthony Albanese in San Francisco last year. Picture: Reuters

Investors based in mainland China accounted for just under half the expenditure, pouring $2.5 billion into Aussie real estate over the period.

Hong Kong, Taiwan and Vietnam were the next biggest sources of investment – each with a total of $300 million in spending over the three quarters.

Juwai IQI co-founder and group managing director Daniel Ho said Australian property’s high returns – prices have increased 42 per cent in the past four years – were a key draw for foreign investors.

Other pull factors were the proximity to Asia, economic stability and high quality of life.

The Melbourne CBD has historically been the most popular Australian market for overseas investors. Picture: David Caird

Under current regulations, foreign buyers without residency can only purchase new builds and are taxed at higher rates.

Australia has continued to draw strong interest from Asian investors this year, even as the federal government announced moves to cut net overseas migration, according to Juwai.

The group’s Asia-Pacific Cross-Border Residential Property Buying report showed Australia was the top choice for investors from multiple Asian countries, measured by the volume of buyer inquiries over the first quarter of 2024.

This included investors from Hong Kong, mainland China, Malaysia and Thailand – the four Asian countries making the most cross-border buyer inquiries over the three-month reporting period.

A woman walks past a complex in Beijing by China’s deeply indebted Evergrande Group. Picture: Greg Baker/ AFP

“Australia’s large annual intake of overseas students and migrants helps create new demand for purchases,” the report said.

ABS figures released last week showed net overseas migration for the 2023 calendar year was the highest ever in history, at 547,200 people. It exceeded the previous record of 433,100 in 2022.

Mr Ho noted that most Asia-based buyers were purchasing Aussie real estate for a combination of their own use and investment purposes.

“Most Asian buyers aren’t pure investors,” he said. “They do appreciate that a home in Australia is probably a safe investment, but really, they are purchasing places they want to live in.

“They are education buyers, migration buyers, and second-home buyers. They want to study, work, and live in Australia, or to visit family who do.”

Daniel Ho, co-founder and group managing director of international real estate company Juwai IQI. Picture: Supplied

Mr Ho said education opportunities were a key driver of foreign purchases, particularly among Chinese buyers.

“By my estimate, perhaps as many as half of Chinese buyer transactions involve families with someone who is in Australia because they are studying or have completed their studies there,” he said.

Foreign demand for Australian property could weaken as the federal government places further limits on foreign students with the goal of cutting migration, the Juwai report noted.

The Albanese government announced in May a bill seeking to cap the number of overseas student arrivals from 2025.

Real estate agents Fiona Yang and Peter Li from Plus Agency, who have been selling to many global investors. Picture: Sam Ruttyn

Peter Li, general manager of the Sydney and Shanghai real estate group Plus Agency said property purchases from foreign buyers often preceded a move Down Under.

“The majority of Asian buyers in Sydney are looking to spend about $2 million,” he said.

“They want a duplex or a house, if they can afford it, anything with a Torrens title. So, they are less interested in strata townhouses and apartments.

“I’d say 80 per cent of them are owner occupiers. They are buying to live in it, either now or sometime in the future.”

Originally published as Why Australian homes are now top target in world for Asian investors