Rich Sydney

Read in NRC Handelsblad of 16 May 2015:

Both correspondents of NRC Handelsblad in the Far East, Oscar Garschagen (China) and Melle Garschagen (Australia), wrote two articles on the real estate market in Sydney, Australia. Last year, Chinese investors spent 12 billion Australian dollars on real estate in the ‘country of land and rocks’, mostly in Sydney. Four years ago it was only 2 billion. One of the investors is the Chinese billionaire Xu Jiayin, who owns a fortune of 7 billion dollars. He bought a 39 million dollar-house on the bay. The Australian Minister of Finance, Joe Hockey, now forces him to sell it. Why? Because he thinks it is against the national interest. The real reason is political of course. Sydney is becoming too expensive for many people. Citizens can no longer afford a house in this successful city of 5 million inhabitants. One fifth of all property transactions is Chinese now. People are afraid the Chinese are boosting the prices. The average price of a dwelling in Sydney is now 1 million dollars. So a new law forces  foreign investors who want to buy a house worth less than 1 million dollars to pay a tax, which doubles if the price exceeds 1 million. For buying agricultural land worth more than 15 million dollars a special permit is needed.

Oscar Garschagen explains that the value of the yuan is rising, while the value of the Australian dollar is weakening. Big Chinese real estate firms like Wanda and Vanke were the first to enter the Australian market. Now the others follow. For the Chinese the US is still the most popular real estate market. (The yield of real estate in Europe, all Chinese think, is far lower). But it also has to do with government control. Many transactions are illegal, because Chinese families prefer to do business with secret banks that operate in networks on a global scale.  These illegal banks seem to work with a capital of 3.000 to 5.000 billion dollars. In Australia they can operate relatively easily. And all Chinese know that real estate prices may drop, but not the price of land. Because in Communist China the state owns all the land, Chinese have to buy it abroad.  Almost every Chinese dreams of getting rich and live the rest of his life in Australia. In Sydney. Sydney is in trouble. It is getting rich.