Developers cancel launches as coronavirus deters offshore property buyers

Measures to contain the spread of the coronavirus in China and travel restrictions mean buyers can’t get to events.

Companies are being forced to cancel delegations of property developers who had planned to visit cities in China.

Developers are cancelling launches of new apartment blocks and investment seminars targeting offshore buyers as they confront a potential fall in sales due to the coronavirus outbreak.

The property industry had hoped the new year would be marked by a pick-up in demand. While local buyers are out in force, a predicted surge in offshore investors into the top end of the residential market has been delayed.

Measures to contain the spread of the coronavirus in China and travel restrictions are causing problems for agencies as buyers can’t get to Australia.

Dr Andrew Wilson, chief economist at My Housing Market, said a number of investment presentations he was slated to give had been cancelled as attendees, many from China, could not attend.

Local developers were also cautious about holding events, he said, as “there are some issues from a risk management perspective for staff”.

Dr Wilson said some developers were concerned about holding open events for large groups. “It’s problematic in terms of the marketing process,” he said. “There may be fewer sales because of that.”

The Investorist sales business that connects Chinese buyers to Australian developments has already written down more than $200,000 in costs related to failed delegations.

The company was forced to cancel a delegation of property developers to three Chinese cities in March after all 10 pulled out, causing losses of $200,000. Investorist’s Shanghai office will be closed until enforced public holidays to contain the virus end.

Investorist founder Jon Ellis said sales volumes coming out of China would remain low.

“The whole industry is in a bit of a pickle,” Mr Ellis said. “No property developers are going over there and also no agencies.”

He expects investment in Australia will slow as Chinese outflows fall off globally but he predicted they could pick up again after the scare dissipates. “Once coronavirus settles down and is under control, I think people will look back to Australia and will see it as very favourable. But certainly for the next month or two, I would not expect to see many contracts coming out of China,” Mr Ellis.

The Agency’s head of national sales Tom McGlynn compared the potential impact of the virus to the bushfires that knocked confidence last month.

“I think it potentially has the opportunity to affect the market in a similar way that the bushfires affected the start of the market here in Sydney. We’re only just starting to see a lot of a property in the market now that I’m sure was planning on hitting the market in January,” Mr McGlynn said.

Vendors may also become cautious about holding open homes.

“I think the coronavirus, if it starts to infiltrate more into Australia, will have an effect on people’s thought process of opening up their property and wanting people to be able to potentially go through homes,” Mr McGlynn said.

Some agents with Asian backgrounds had also found buyers were cautious.

“We’ve got quite a few Chinese agents who speak the language but they haven’t been back to mainland China for some time. They have felt a little bit of prejudice dealing with the public out there,” Mr McGlynn said.

But he said this could be only a short-term effect.