Chinese investors get around tighter controls on money flow

The new Bunnings Grey Lynn which Whillans Realty sold for $37m on a firm yield of 4.98 per cent after competitive ...
SUPPLIED

The new Bunnings Grey Lynn which Whillans Realty sold for $37m on a firm yield of 4.98 per cent after competitive bidding drove the price up.

About 90 per cent of all computer currency Bitcoin transactions take place in China as people use it to transfer money out of the country, according to property researcher Brendan Keenan with Whillans Realty.

The attraction of Bitcoin is its lack of traceability, until cashed up into a traditional currency, and lack of transaction fees which can can be significant.

Keenan's interest in Bitcoin is how it facilitates property deals at a time when the Chinese government is tightening up the movement of money out of the country to places such as Auckland.

Bruce Whillans, owner of Whillans Realty has had a good run of sales to overseas and local buyers.
SUPPLIED

Bruce Whillans, owner of Whillans Realty has had a good run of sales to overseas and local buyers.

Keenan said the mood in China had changed dramatically since 2014 when China liberalised individual investors' annual overseas quota from US$50,000 to US$2m, but more recently reversed it back to the lower figure.

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Chinese authorities have cracked down on state-owned enterprise deals except those approved at the highest level.

Keenan said this had reduced the ability of Chinese investors to compete in international property markets.

One of the effects has been on the apartment market in Melbourne where about 5000 new apartments are due for completion this year.

Some Chinese investors were reportedly walking away from deposits because they were unable to get money of China or borrow in Australia, Keenan said.

As a result vendors were seeking larger deposits. In February, London's Cheesegrater skyscraper sold to a Chinese investor after he provided a 25 per cent deposit for the NZ$1.8 billion building.

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Closer to home, Keenan said while there had been reports of fewer Chinese bidders at auctions, there was still significant interest in landmark development sites in Auckland and Queenstown.

​In May, Whillans received eight out of nine offers from Chinese investors for an $80m Auckland land holding.

Chinese companies could still draw on funds from companies listed outside China and vendors were becoming more comfortable with staged deposits and delayed settlements to facilitate Chinese buyers moving cash out of China, Keenan said.

Agency owner Bruce Whillans said the Whillans group had enjoyed an exceptional three months with 11 commercial sales worth $401m.

One of them included the new Bunnings Warehouse Grey Lynn sold to a local investor for $37.7 million at a record low yield of 4.98 per cent for the Bunnings brand and among the lowest for any commercial property. 

It was sold via an international tender attracting 100 groups, with a new 12-year lease back to Bunnings.

The sale represented a price of $9500 a square metre, one of the highest land prices in Auckland, and comparable with another recent Whillans sale of a car park at 292 Parnell Rd at $9388/sqm. The park sold for $7m at a yield of 2.06 per cent.

Other recent sales by Whillans Realty included an office property at 15 Osterley Way for $14.1m (7.8 per cent yield),  

Whillans said there had been interest in larger residential blocks of land but also in investment stock such as the new $150m design built AUT building on Wakefield St developed by Prolex. ​Just one out of 11 offers came from a local.

"Despite a shift in investment from China, over the past quarter we've noticed growing interest from buyers in Europe, Singapore, Korea, South Africa and Australia."

 - Stuff

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