Why Chinese investors were able to snap up Australian farms

A rural property expert has revealed insights into Chinese Government grants and loans, which allowed investors to pay a premium price for Australian land and outbid farmers.

Managing director CBRE David Goodfellow.

AFTER snapping up land in Australia, Chinese investors are now buying farms in South America, according to a rural property expert.

CBRE’s managing director David Goodfellow, who spoke at Beef Australia last week, said the Chinese Government were wanting to test the free trade agreement in place with Australia because they knew they could get what they needed from elsewhere.

“The Chinese community are now motivated to start investing in Brazil and Argentina,” Mr Goodfellow said.

“The Chinese Government wants a better deal for themselves knowing they can get what they need out of South America”.

He said the wave of Chinese investors buying Australian farms started in 2013.

“What hasn’t been broadly publicised, but certainly was the case, is that those Chinese investors had access to grants from the Chinese Government but also and subsidised interest rate loans,” Mr Goodfellow said.

“I was working for a Chinese group at the time and we had access to those grants and loans.”

He said at the time, banks in Australia were offering loans with a five per cent interest rate while Chinese groups were able to access money out of China 2.5 per cent interest.

“If our cost of capital was half of the Australian farmer, we could technically pay 25 per cent over the market for land we really wanted and still take home the same net return,” Mr Goodfellow said.

He said every Australian farmer benefited from this.

“What we saw was a big motivation by the Chinese Government to come and buy land in Australia, but that was followed by up incentives the Chinese trading community to buy more and more produce from Australia,” he said.

Mr Goodfellow said the grants and subsidies were shelved in 2017.

It comes as the number of Australian farms owned by foreign interests ballooned almost 10 per cent in 2020.

The Weekly Times reported at the end of last year, the latest figures from the Foreign Investment Review Board showed 9897 farm titles in Australia were owned by some level of offshore interest in 2019-20 – an increase of 853 or 9.4 per cent on the previous year.

China was again the biggest offshore landholder with 9.2 million hectares – 8.4 million hectares of which is lease country.

MORE PROPERTY

HOW MUCH YOUR FARM IS WORTH

FARMLAND VALUES REVEALED IN MAJOR REPORT

TOWNS HARDEST HIT BY RENTAL SHORTAGE