ABC Radio this morning ran a segment on how Australia’s real estate agents are making out like bandits selling homes to Chinese nationals:
Bridget Brennan spoke with Sydney developers and agents overhauling the way they do business.
BRIDGET BRENNAN: Waterfront properties at Mosman on Sydney’s North Shore sell for millions of dollars and these types of homes are proving extremely popular with Chinese buyers.
Local estate agent Richard Simeon says his Chinese clients have particular requirements.
RICHARD SIMEON: They have some set criteria which they prefer, being north facing, they love large blocks of land, they love very good water views, not surprisingly.
I sold two properties over $8 million in the last month to Chinese buyers.
BRIDGET BRENNAN: In the last few years Mr Simeon has been dealing exclusively with Chinese buyers.
Once they’ve purchased a house some of his clients go to great lengths to ensure they’ll have a happy home…
BRIDGET BRENNAN: Developers are also cashing in on the Chinese investment boom.
David Milton is the managing director of residential programs at the property group, CBRE.
DAVID MILTON: We sell projects and we found that with the number of Chinese that are looking in Sydney and visiting Sydney we opened an office, a shopfront in the middle of Chinatown because most Chinese that visit Australia in Dixon Street sort of three or four times and they stay so opening a shopfront there works really well with actually advertising property and attracting them.
So, in our sales team we have in Sydney just over 70 sales people. I think 25 of those speak Mandarin…
BRIDGET BRENNAN: And Sydney’s booming real estate prices haven’t dampened demand.
William Shen, the director of the Asian Division at TGC Property, helps Chinese investors find a place in the Australian market.
They tell him the return here is better than what they’d find at home…
BRIDGET BRENNAN: Simon Henry is based in Hong Kong where he runs Juwai.com, a property site he founded which advertises Australian homes to the Chinese.
He says increasingly local estate agencies are opening offices in Beijing and Shanghai to go direct to buyers.
The obvious question that arises out of this is: how many of these transactions are illegal sales of existing dwellings to non-residents?
After all, Australia’s foreign ownership rules clearly state that non-residents are precluded from purchasing existing homes. Moreover, temporary residents that purchase an existing dwelling must sell that home within three months of departing Australia.
The Paris-based Financial Action Task Force (FATF) on money laundering has already warned that Australian residential property is a haven for international money laundering, particularly from China. As has the Australian Transaction Reports and Analysis Centre (AUSTRAC), which warned that “laundering of illicit funds through real estate is an established money laundering method in Australia”.
The Government’s enhanced rules on foreign investment are scheduled to come into effect in November, which will significantly strengthen the compliance/monitoring of foreign real estate sales, as well as increase penalties for non-compliance.
Included in the new regime are fines of $45,000 for individual third parties – such as real estate agents, lawyers and accountants – that knowingly assist a foreign buyer to breach the rules.
Let’s hope the threat of prosecutions and penalties puts an end to Aussie real estate agents willingly selling-off Australia’s existing homes to foreigners.