Attracted by cheaper prices, thoughts of emigration and the relative safety of overseas real estate markets, a growing number of Chinese citizens are purchasing land abroad, even if it means investing under fictitious names to circumvent currency regulations.
"Obstacles still exist in the minds of domestic investors, who tend to prefer short-term, high-risk investments over lower-yielding but safer options like offshore property," said Edmond Lai, Hong Kong-based manager of Asian marketing at Australand, a property developer in Australia.
Overseas real estate companies, attracted by the sheer number of potential customers in China, are trying to change that. At the same time, recent changes that somewhat loosen the outflow of money and a growing number of more educated investors are making the pitch easier.
China has no regulations limiting how much overseas property citizens can buy but restrictions on renminbi convertibility do pose a hurdle. Officially, Chinese citizens are not allowed to take more than US$2,500 out of the country without government permission so investors often have to find other ways to move money. This has created a wave of new "hidden rich" Chinese who invest in property abroad but want anonymity.
"We don’t ask them why they buy under another name," said Lai. "We just help them make the purchase as efficiently as possible ? Immense growth has occurred in the four years we’ve been here."
Visa issues also play a key role. With Canada and Australia far more open to Chinese migrants than, say, the US, it creates a knock-on effect in Chinese interest in these countries’ property markets.
For one Chinese investor, 40-year-old real estate firm owner Chen, buying property abroad made sense. He has a home in Melbourne because it’s safer and more stable than Shenzhen, where he lives.
"I was tempted by the stability of the Melbourne lifestyle… and also its affordability," said Chen, who has yet to set foot in Australia. "I considered places like the US, but with terrorism and higher property costs, it didn’t meet my needs."
Australia has emerged as a prime destination, said Colette Chester of Which Property, a Brisbane-based agency that opened an office in Shanghai a year ago. Unlike China, where land is available on limited leases, Australia offers the allure of freehold ownership.
"There’s a lot of stability in Australia. It’s a strong economy, and we’re free of a lot of the natural disasters that other countries have."
One glitch, for Chinese investors, is the myth of fast-track citizenship for property owners. Many people invest in overseas real estate only to find that it does not help with their plans to immigrate. What’s more, different countries have different regulatory restrictions for investors without permanent residency. Australia, for instance, limits foreign citizens to buying new properties. Those who do not have residency can’t buy real estate secondhand.
Another issue is created by the agents who promise far more than they deliver.
"There are cowboys for every product, some developers will even rip you off by not finishing a house – but new investors should count on companies with a strong track record rather than schemes that sound too good to be true," said Lai.
Despite the growing interest in Australian property, some investors are skeptical.
Alan Crawley, a 33-year-old Hong Kong financial trader, says he wouldn’t consider investing in Australian property after hearing horror stories.
"I’ve known people who were drawn in by the bargain real estate prices of Queensland but only to find that there’s no profit to be made," said Crawley. "From my experience, the agents make it sound much more glamorous than it really is."
Regardless of the negative experiences of some, real estate agents see little beyond millions of new potential customers.
As Lai said, "With more Chinese migrating overseas, we anticipate those numbers to soar."