Increasing interest in Fixed Assets

If we look at investments reported in Australia by Chinese companies – both state owned and private, these invested a total of $3.2 billion in Australia in 2011, an 86 per cent increase from 2010.
A senior trade official from the Chinese Embassy, Shi Ziming, was reported recently saying, “Chinese private companies were likely to lead the next wave of Chinese investment abroad despite the present dominance of state-owned enterprises. Private companies accounted for more than 50 per cent of Chinese investment abroad last year. Private enterprises will definitely play a more and more important role in the process of the nation’s outbound investment activities.”

This is certainly our experience. If we look at the significant clients coming to us over the last 15 – 18 months via our Shanghai office, they are predominantly company owners representing a range of manufacturing, medical, IT, service and property development sectors. They are anxious to make investments in real assets in Australia.

Chinese private investment in Australia is still to develop real momentum, despite what is happening in other western economies.

With an eye on Chinese overseas real estate investment – compare Sydney or Melbourne with the activity in London. In 2011 Chinese buyers accounted for 28% of all prime London property sales and 54% by sales value in the prime central London area, where houses go for 5 million pounds ($8 million) on average, according to a recent report by Savills research.

“If the money from China were to start flowing into London at the same rate it does from billionaires in other countries, we would expect the value of ultra-prime London properties to grow by as much as 15%,” Yolande Barnes, head of Savills residential research told China Daily.

Putting the billionaires to one side – China’s middle-class population (defined as those with annual income of at least US$17,000) has reached more than 100 million as of 2011, while the number of HNWI’s worth more than 10 million yuan (US$1.5 million) is estimated to be 825,000, according to Hurun Report (2011).
Classifications come and go, but the wealth marches on.
In recent visits our clients have shown great interest in real assets in Australia. The real assets attracting particular interest include commercial and residential real estate, agricultural land and to a much lesser extent, precious metals and commodities.
They are buying selectively and typically have a long term view.

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