Australian real estate remains the top pick for Chinese buyers in 1H 2023

• Australia was found to be the number one destination for Chinese home buyers.
• Chinese property buying to resume as international travel recovers.
• Interest in overseas property driven by savings, nouveau riche, and trust in overseas markets.

Chinese buyers are cashed up and ready to invest, with our northern neighbours accumulating wealth throughout the doldrums of Covid and lockdown.

Juwai IQI’s latest report on the top destinations for Chinese home buyers has put Australia at the top for the first half of 2023; Australia was also the location of choice for 2022.

Top 10 Chinese buyer destinations by year

Source: Juwai IQI.

The report found that wealthy Anglo countries remained top of the list, along with a handful of southeast Asian countries.

“The only non-Anglo, non-Southeast Asian destinations in the top 10 are Japan and the United Arab Emirates,” said Juwai IQI co-founder and group CEO, Kashif Ansari.

“Japan is ranked seventh, roughly the same as in prior years. The UAE has moved up the list rapidly in recent years. After ranking 13th in 2021, the UAE entered the top 10 for the first time in 2022 at ninth and this year placed eighth.”

Post-COVID travel recovery fuelling investment

Where the pandemic marked the halt of global tourism, it seems like 2023 is the year when travellers returned.

Pre-pandemic, Chinese tourists made the most flights and spent the most money compared to all other countries — Mainland Chinese travellers spent $255 billion over 155 million outbound trips in 2019 alone, equivalent to 17% of worldwide outbound travel expenditure.

The pandemic saw international flights from China dip from over 40,000 in 2019 to under a thousand per year from 2020 to 2022. In June 2023, Chinese cross-border travel remained at 45% of its pre-pandemic levels.

Though the reopening of borders has facilitated the hasty recovery of international travel, it has done so at a level below expectations. International flights from China skyrocketed from under 1,000 to over 15,000 by June 2023.

Airline seat capacity and inflated ticket prices remain the biggest obstacles to a full recovery in international travel. Capacity is at 37% of pre-pandemic levels, and a pair of tickets for the Dragon Boat Festival holiday period costs twice as much as they did in 2019.

Overseas property investment is linked with the ability to travel, it seems, Ansari observing:

“Chinese overseas property buying fell by 30% to more than 50% during the pandemic, depending on the market. That demonstrates that about half of transactions are dependent on buyers being able to travel.”

Record savings and the newly rich propping up overseas home buying

Several forces are driving Chinese interest in overseas real estate.

Firstly, the nation’s upper-middle and high-income class continues to blossom, despite a slowdown in the country’s economy. The number of high-income households is predicted to grow by 50% by 2025.

Secondly, Chinese consumers have accumulated substantial savings, spurred on by restrictions during the pandemic. Official statistics report that Chinese savings deposits rose by US$3.6 trillion in the first nine months of 2022.

Finally, confidence in China’s domestic market is flailing, motivating cash-rich Chinese investors to take their business elsewhere. China’s top 100 developers’ contract sales dropped by 57.2% in May and 46.9% in April compared to the same months in 2019. Markets in top-tier cities are slowing, and home prices have shrunk by 0.7% in April, 10% under their 2021 high, and lower than in 2018.

Chinese investors see overseas real estate as a familiar, appreciating, and dependable long-term foreign currency income not tied to China’s economy. In Australia, where a cost-of-living crisis, historical inflation, and record housing shortfall is the norm, affluent Chinese investors have the edge over local buyers.