Photo taken on March 30, 2020 shows the view of empty Darling Harbour in Sydney, Australia. (Photo: Xinhua)
Australia's real estate sector is expected to experience a continued drop in investment from China as bilateral ties plunge to their worst level in decades, after media reports on Chinese investors pulling out of a $58.5 million Sydney property deal after facing an extraordinarily long review time from Australia's foreign investment review panel.
An eight-month-long investment review process, two months longer than stipulated, by the Australian Foreign Investment Review Board (FIRB) has caused a group of Chinese investors to ditch a $58.5 million bid to buy a Sydney office tower, the South China Morning Post reported on Thursday.
The action by FIRB has faced complaints in Australia, with those from the real estate industry raising doubt on the Australian government's tightened scrutiny on purely commercial projects that have no security concerns.
Chinese experts following bilateral trade and investment relations between China and Australia noted that the incident will harm the growth of the Australian real estate sector, which had entered a period of prosperity with the active participation of Chinese investors since 2013.
Song Wei, associate research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Friday that some Australian politicians have been closely following the US' containment strategy against China in a wide range of issues that had harmed China's core interests.
"The recent groundless delay tactic that killed off a major real estate investment bid would no doubt deter Chinese buyers' passion for investing in Australia, and this in time will cause a severe blow to the Australian housing market," Song said.
Zhang Jiayuan, a partner at Beijing-based Ransenhuizhi Investment Fund Management Co, told the Global Times that she expected the current situation of slowing and declining Chinese investment into the Australian real estate sector will last for the next two to three years, due to the physical inconvenience imposed by the COVID-19 pandemic and the changing world economic situation. In recent years, Australia has tightened rules for investment into its housing sector.
There are also more restrictions in transferring foreign exchange outside China by investors for projects like real estate, as such investment is not encouraged by the Chinese government, an industry insider familiar with real estate transactions told the Global Times on Friday.
"The number of Chinese developers and buyers in Australia's real estate market has reduced a lot, but rigid demand for immigration remains unchanged," Huang Kun, owner of Melbourne-based building company Energent Pty Ltd, told the Global Times on Friday.
Real estate transactions in Australia have almost frozen because of the COVID-19 outbreak, Huang said, noting that there is a rebounding trend but signs are not so apparent.
Experts said Australia is politicizing and demonizing Chinese investment in Australia, making investment subject to geopolitical struggles. In September, related Australian authorities weighed in on a dairy sector acquisition bid led by Chinese dairy firm Mengniu and caused the deal to be aborted.
Since 2018, more than 10 Chinese investment projects have been rejected by Australia, and the country cited unfounded "national security concerns" to ban Chinese companies in its 5G network building, and put restrictions in areas like infrastructure, agriculture and animal husbandry.
Australia has also launched as many as 106 anti-dumping and anti-subsidy investigations against Chinese products, while China has only initiated four investigations against Australian goods.
As relations soured, a number of Australian goods from beef to timber are reportedly running into trouble in China.
China is firmly opposed to Australia's action of undermining the interests of other countries under the pretext of safeguarding its own national interests, Chinese Foreign Minister spokesperson Zhao Lijian warned Thursday following Australian Prime Minister Scott Morrison's statement that Australia will not change its policies.
The Australian side acting out of turn on issues concerning China's core interests and its provocative and confrontational actions are the root cause of the current tensions in China-Australia relations, Zhao noted.
According to the report by the Australian National University in September, Chinese inbound investment has declined sharply from A$4.8 billion ($3.49 billion) in 2018 to A$2.5 billion in 2019. At its peak in 2016, Chinese investment was A$15.8 billion.
The findings were in line with a June report by KPMG and the University of Sydney showing that Chinese investment in Australia, in US dollar terms, fell 62.2 percent during 2018-19 to $2.4 billion.