The amount of Chinese cash which once poured into Australian property has halved, leaving developers and agents scrambling to recapture the record volumes of investment.
As industry interest in selling off-the-plan property to Chinese investors declines, it is increasing in India.
Investorist chief executive Jon Ellis said it was unlikely the recent explosion of foreign money flowing into the property industry’s coffers would ever be replicated, and similar market conditions in other Asian countries meant the area’s investment potential wasn’t yet tapped out.
“We’d been getting a bit drunk off this flood of money coming from China,” he said. “Once the tap turns off people get a bit anxious and they say ‘where can we go next?’.”
One of biggest emerging markets is India. Of all the thriving economies, India and China shared the most similarities. Because of this, more agencies and developers are setting up offices in India in an effort to tap into a market that has so far been relatively uninvolved in Australian property.
“They’re thinking: ‘OK, this is new. There’s just as many people here as in China and there’s a lot of money getting around’,” Mr Ellis said.
Last year, just 6% of Investorist clients were looking to sell in India. This financial year, it’s 21%. That was the biggest increase for all countries. In comparison, China went from 86% to 60%, a fall of 26 points.
Former ministerial adviser Mr Nitin Gupta said, “As more people from India visit Australia, study and settle here, have friends and relatives who become relatively successful in Australia, their interest in investing in Australia in various avenues including real estate is likely to increase.”
He added that the wealthy in India were looking for lifestyle and asset protection. “We’ve still got relative political stability. We’re one the most liveable countries in the world. So Australia is in a good position to attract Indian investment in different avenues including real estate,” he said.
Mr Gupta said increasing Indian investment to Australia would be dependent on whether these companies could sell the Australian dream of property, and other investment avenues to Indians. “While some market fundamentals in India were similar to China, they so far lacked a culture of investing in Australia,” said Mr Gupta.
When Chinese investment flowed into Victoria, suburbs like Box Hill, Glen Waverley, and Doncaster with a large Chinese community appreciated in real estate value.
Similarly when Indian investments start to flow in to Victoria, suburbs like Cranbourne, Wyndham, and Point Cook that have a large Indian community should head in the north direction when it comes to real estate prices, said Mr Gupta.
Australian companies, especially real estate firms, continue to advertise heavily in Chinese newspapers in Australia, and they still support Chinese community events, but spend on advertising in Australian Indian newspapers and Australian Indian community events is lower.
Mr Gupta said it was difficult to gauge how many wealthy Indian investors would want to invest their capital in Australia, but Australian companies including those in real estate setting up offices in India to attract investment is a ‘good sign’. “It’s high time they start engaging more with the Australian Indian community and their media, events etc,” he added.