Chinese overseas direct investment into Australia hit A$15.4bn ($11.5bn) in 2016, up 12 per cent on the previous year with a record number of deals and despite growing wariness over foreign buyers snapping up infrastructure, according to a new report.
The record 103 deals made during the year included A$7.6bn of investments made by private Chinese companies from a record 78 deals, according to the report by KPMG and the University of Sydney.
Commercial real estate saw the largest investment, attracting A$5.6bn, or 36 per cent of the total – down marginally from 2015. This was followed by A$4.3bn of investment into infrastructure, which at 28 per cent of the total marked a record year for the sector. Healthcare investments put that sector in third place with 9 per cent of total investments, or A$1.4bn.
Australia has introduced tougher scrutiny of sales of ports, utilities and other public infrastructure by the Foreign Investment Review Board amid a surge in Chinese investment. The country last year blocked two A$10bn-plus foreign bids for electricity company Ausgrid on national security grounds and in January introduced a new body to identify critical infrastructure.
In regional terms, New South Wales saw 53 per cent of total investments from China at $8bn, followed by Victoria at A$3.9bn.
Tasmania saw a record year for Chinese investment as well, with A$280m poured into agriculture. Overall investment into agribusiness tripled in 2016 compared to a year earlier, pushing it from seventh to fourth place at A$1.2bn.
Major agribusiness investments ranged from a $386.5m deal for S. Kidman & Co to a joint venture between Hancock Prospecting and Shanghai CRED Real Estate. Previous bids had been rejected by the Foreign Investment Review Board on grounds of national security as the property in question, which represented 1 per cent of the country’s land mass, was near a military testing range. The successful bid was approved after selling a portion of the land to an Australian family.
Chinese investors are also targeting tourism assets and Australia’s retail sector has seen A$1.7bn in hotel assets acquired by investors from the world’s second-largest economy, as well as A$550m invested into retail assets over the past two years, the report said.
The number of Chinese visitors to Australia rose by 22 per cent to 1.1m in the 12 months to September 2016, according to Tourism Research Australia. These visitors spent A$9.1bn during their trips.
The report from KPMG and the University of Sydney sees interest in this sector growing in the current year:
With trophy office assets remaining tightly held across the major Australian cities we expect to see further broadening of Chinese investment into tourist infrastructure and retail assets over the course of 2017. Residential and mixed use development sites will also remain highly sought after with further penetration into the house and land market expected.