Rich Chinese eye Australian investments

Ultra-wealthy Chinese citizens worried about economic volatility in their home country will increasingly park their funds offshore, with many targeting Australia as the destination of their investments.
That is the prediction of Investorlink Residency managing director Natasha Wood, who believes Chinese investors will pump more of their funds into overseas assets despite the Chinese government tightening its rules around money going offshore.

Ms Wood, who provides Australian residency and investment advice to clients from China's wealthy elite, said expressions of interest for the Australian government's Significant Investor Visa (SIV) programme were still healthy despite a tightening of foreign exchange rules and jitters in the world's second largest economy.

"They're very cautious, but I don't think it's slowed down in terms of interests in Australia and expressions of interests [for SIVs]," she said.
"Because the property market has stalled in China for example, they've decided 'we want to go overseas'."

The SIV programme, which was introduced in 2012, allows high net worth Chinese investors seeking residency in Australia to make direct investments into the country. Those seeking to migrate need to invest a minimum of $5 million over four years, including venture capital and growth private equity funds, and at least $1.5 million into emerging companies.

Real estate remains the top investment in demand by Chinese investors, followed by venture capital, Ms Wood said. But not everyone is optimistic about China's inflows into Australia. According to the International Monetary Fund, Australia will be one of the worst-hit advanced economies from slowing Chinese investment growth.

Economists are predicting a stall in global economic growth next year due to China's slowdown, with some expecting a recession to hit.

In May, a KPMG/University study found that Chinese investment in Australia had shifted radically to commercial real estate and infrastructure. The research found that private Chinese money had overtaken state-owned enterprise investment for the first time.

While Chinese investments into Australia fell nearly 10 per cent to $US8.3 billion last year, Australia remained relatively competitive with the US economy where direct investment plunged 14 per cent to $12 billion.

Around 46 per cent of Chinese investment concentrated on commercial real estate, from 14 per cent in 2013.

Chinese investors were particularly attracted to NSW, which received around two thirds of total investment. But Chinese purchases of Australian property have dropped in recent months as Beijing tightens its grip on capital controls.

According to the Department of Immigration, the Australian government received 2287 expressions of interest during November 2012 to March 31 this year.

Primary visas were granted to 751 applications, and as of March 31, around $3.75 billion of Chinese investors' funds have been invested in complying assets.

Ms Wood believes that demand for SIVs will continue despite worries about a slowing global economy.

If you would like to disucss further, you can contact Natasha by clicking here.

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