Agents cash in on Chinese buying spree

By Leith van Onselen

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.

[email protected]

Comments

  1. Yes let’s hope.
    Can’t wait for the prosecutions and criminal records/fines/jail for the illegal buyers and their accomplices.

      • So real estate agents have until November 2015 to sell the rest of the country to Chinese infestors before anything will be done about it?

    • What, are you expecting the current government to do something about it? You’ve got to be kidding. Weasel words from hockey and Abbott, pretending to do something about it while their snouts are firmly in the trough. Hockey, worth about 20 million, will be a big winner. Selling of the country’s silver. The neo cons have got their way.

      • Track record of the Abbott government shows their modus operandi is to appear tough on issues, while doing just about everything else to undermine that position subversively (boat people vs unlimited 457s, toxic carbon tax vs actual tax burden with Direct Action).

        It would be reasonable to assume Abbott is highly unlikely to follow through with actual prosecution of foriegn investors as he himself categorically said that he wants house prices to rise, very recently in fact.

        I’m sure Abbott is not conflicted, but is simply following his track record of talk tough and appear tough on voter concerns, while undermining them at the same time.

  2. It would only take one or two custodial sentences or examples of people ruined by needing to pay a fine to stop this dead in its tracks but yeah it has to happen for the threat to be meaningful.

    • alterbrainMEMBER

      I’m afraid Fitzroy has it. Essentially there is a window until November for RE to make out like bandits. I’m sure our professionals are up to the challenge.

      • Seems about right. After all, Big Joe has promised not to prosecute anybody at all until after 30 November:

        “Foreign investors who think they may have broken the rules should come to us before we come to them.

        “They will still be forced to sell the properties, but will not be referred for criminal prosecution if they voluntarily come forward before 30 November.” (Joe Hockey, 09 June 2015)

        Seems crystal clear – you can act with complete impunity until the stroke of midnight 30 November. If you’re not selling your guts out right now, you’re going to lose.

      • I suggest there will be a dip in December, while everyone waits to see whether Joe is serious or not.
        In the not unlikely event that nothing whatever happens, the party will resume in the new year, unless further travails on the mainland have reversed the trend towards the creation of new Chinese millionaires.

      • “Big Joe has promised not to prosecute anybody at all until after 30 November:”
        Incorrect: Hockey has undertaken not to prosecute those who self report before Nov 30.
        There is a subtle difference


      • Incorrect: Hockey has undertaken not to prosecute only those who self report and divest before Nov 30.

        He can’t prosecute anybody before November 30 and still give them an opportunity to self report. Hence he can’t start a prosecution before then without rescinding the amnesty, which is as good as saying he won’t prosecute anybody until December 1st.

        There is no suggestion that RE agents have to give back their commissions if someone divests, so there remains an incentive for RE agents to pretend to be ignorant as to the residency status of buyers, while selling as hard as they can.

      • Josh Moorrees

        This would probably explain the timing of the McGrath IPO then. get out while the cash is flowing because come December their revenue is going to take a hit.

      • Do you actually believe that there will be a prosecution announced between now and COB November 30 or are you just being mischievous?

        As you yourself said, ‘Joe chooses not to’, i.e. prosecute. Are you saying that he is going to change his mind in the next four months or so?

    • +1 There is nothing stopping prosecutions of illegal foreign purchasers commencing now.
      Joe chooses not to.
      1536 prosecutions commenced for ridesharing in Qld in the last 12months.
      Zero prosecutions commenced for illegal foreign purchases in Aust in 8yrs.

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    • wasabinatorMEMBER

      “To establish an account you must provide sufficient identification under the Anti-Money Laundering and Counter-Terrorism Financing (AML) Act.”

      All over $10? The smart money is moving millions into Aus property without having to worry about that nonsense 😉

    • That’s a shame – the Chinese love to gamble. If we could get rid of that last bit of AML red tape, we could attract trillions of dollars for good Aussie businesses like Tabcorp, Sportsbet and, um, Ladbroke’s.

      Horse racing and rugby spread betting could be the new iron ore. Everyone’s a winner!

    • Added to this, Australian citizens, also need to sign a declaration that they are not US residents evading the IRS when opening Australian investment accounts!

      “The Australian Government has entered into an Inter-Governmental Agreement (IGA) with the Government of the United States of America for reciprocal exchange of taxpayer information. Under the IGA, Financial Institutions operating in Australia report information to the Australian Taxation Office (ATO) rather than the US IRS. The ATO may then pass the information on to the US IRS.”

      from
      https://www.vanguardinvestments.com.au/retail/ret/investing-with-us/FATCA.jsp

      • Who needs Bitcoin when you can use Ray White?

        Does Border Force know about this type of thing?

        Banana Republics have a good track record of harboring crooks. Its all part of the business model.

        What is left to sell?

  4. we are continuing to monitor the situation and work closely with regulators…..

    this is disgusting, grubby RE agents need to go to jail or face fines of 100k for this

    I heard this driving to work today…pure greed and disgust…why do I even bother working when laws are so brazenly broken

    why should a foreigner have precedence over me who was born and raised here …why are they not charged through the roof?? why do they pay the same stamp duty as me?

    yet the ato will send out a letter if you forgot to include 30 bucks in interest

  5. why should I, as a taxpayer, follow tax laws when other laws are brazenly broken???

    you cant be selective about laws…either have them or not

    or this is a recipe for disaster as people become belligerent about the situation

  6. bolstroodMEMBER

    A class action in Holland recently has forced the government to take meaningful action on Climate Change .
    A similar class action here could force our legislators to comply with the Laws of the Land as they exist now.

    • Tassie TomMEMBER

      You won’t be able to get George Brandis’s law firm to take on the class action – they’re already too busy.

  7. Where does moral authority exist in our society ? Should it exist in Government ? If there is no trust in government, then what authority does it have ? It only has power, which is a different thing altogether. We are not living in a democracy. We are being treated with contempt by our rulers, which is now begging a response. The longer this continues, the more likely that response will be disproportionate, and manifest itself against the wrong targets. I weep for this country. (Not literally).

  8. Annoying Devil

    If our corrupt authorities won’t/can’t do their job, then perhaps citizens have to do it for them by forming a kind of advocacy group with the aim of protecting the economic and social interests of the wider community, by launching private prosecutions against illegal buyers and the facilitators (RE’s, conveyancing lawyers) of the crime. I would donate money and time into such a cause as I am sure would many, including some wealthy individuals. Putting enough of them through public court proceedings is the only way to stop this.

    http://www.legallawyers.com.au/legal-topics/criminal-law/private-prosecution-in-new-south-wales/

    Does anyone know if this has been done in the past?

  9. I sense a business opportunity here, feng-shui housing consultants for elite mainlanders. Each client will receive a complimentary Louis Vuitton 2014/15 range catalogue, clipboard, gawdy Australian souvenirs and $100 worth of Star City Casino chips.

  10. “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.”

    Ho Ho Ho and a Bottle of Rum.

    How long are we going to pretend this is going to happen macrobusiness ?

    Honestly ?

    The faith this blog shows in established institutions, compliance, governance, etc is astonishing.

    Australia has been TOTALLY seized by corrupt interests – totally – and no one seems to get this. We are a corrupt nation.

    • I always thought Australia was a good country with relatively low corruption, but in the last 15 years it’s changed for the worse.

    • Annoying Devil

      Yes agree as I am sure do others. What’s needed is action, not just words on blogs, and a high profile figurehead to spearhead it. A character with reputation and social standing that can deflect the howls of racism and character assassination that will surely follow. I don’t know who that is, but there probably never has been a more defining moment calling for such an individual in australia’s history.

      • maybe the federal police??

        civil action?

        getting a lose cannon like Jackie lambie to highlight the issue ad nauseum

      • Highlighting them is great, and you do a VERY GOOD SERVICE which everyone appreciates.

        The only downfall has been early on in the piece the overly confident prediction (especially under Odwyers “investigation”) that macroprudential and stricter FIRB oversight “were coming”

        There has been a very strong chorus on these threads claiming that there was an overly confident bias that these things would come, that chorus was claiming it would not happen.

        The shift in macrobusiness has been to gradually accept that those changes were overly optimistic, and perhaps now – may never really appear in any meaningful way.

        Basically – yes, now we have “assurances of governance fatigue” – however previously the optimism and confidence displayed by MB was misplaced.

        It is to that we defer.

      • How about saying “If we could trust the governance of this nation then there is a good chance that the threat of prosecutions and penalties would put an end to Aussie real estate agents willingly selling-off Australia’s existing homes to foreigners” and don’t just phrase it in a way that implies that you expect it to happen. It damages your credibility when you write in such a wide-eyed way.

      • Even StevenMEMBER

        Macro prudential is coming (is here) – our broker called pre-emptively to say ‘don’t refinance’.

        MP takes a while but it is starting to bite. Patience people…

  11. What we need here is a good old fashioned ASIC shadow shop sting. Run by the FIRBies. That will take some wind from these sails.

    • The FIRB is an excuse for a nice cup of tea and a chat. No one remotely connected with it has any ability to run a lemonade stand, let alone any kind of sting operation.

      • Too true unfortunately – its just the thought however – in financial advice, if a person walks into your door and buys a ten grand plan with no questions asked you immediately become suspicious haha

      • in reply to SS re.: “The FIRB is an excuse for a nice cup of tea and a chat. No one remotely connected with it has any ability to run a lemonade stand, let alone any kind of sting operation.”

        Seriously, WHY?
        Why has no-one been investigated and charged by FIRB?
        Has anyone asked Tony Abbott/our PM of Australia why he has not insisted that FIRB do their job according to their job specifications? If so, what was/is his answer?
        Are laws or regulations being breached?
        If not laws, then who is responsible for legislating some laws?
        When can we have these laws made applicable?
        How soon can these laws be applied and can we make subsequent prosecutions retrospective please?


      • Why has no-one been investigated and charged by FIRB?

        Their political masters don’t wish for that to happen.


        Has anyone asked Tony Abbott/our PM of Australia why he has not insisted that FIRB do their job according to their job specifications?

        The FIRB report to the Treasurer and acts on his behalf (the Foreign Takeovers Act never refers to the FIRB, only to the Treasurer). He is 100% responsible. Now that we have had continuity in the office of Treasurer for almost two years, the only conclusion to draw is that incumbent is satisfied with the consistent way the FIRB discharges its duties, and wants them to continue in the same vein, i.e. they conform precisely to the ‘private’ job specification approved by Joe.

      • Even StevenMEMBER

        Yep. Hockey, you are a joke.

        I have been a Liberal voter in the past. Your lack of action on this issue alone will ensure I do not vote Liberal. You idiot. (that’s directed at both Hockey and myself)

  12. Singapore became great on the back of dodgy Chinese money, why should we be the ones to miss out?

  13. makes me wonder whether me, the wife and our new child have a future in Australia…

    nothing is done to curb this, I will believe things will happen when RE agents stop gloating on national radio about breaking the law

    this isn’t the Australia that I grew up in, where literally everything is for sale

    dodgy uni degrees that mean nothing

    PR

    houses

    our best farmland

    • Me and my wife are already planning on launching our new business in Northern Europe.

      We have two kids and I simply can not see a future in this country.

      The problem with unfettered greed and capitalism at any cost is that the first thing to die is a sense of “society”, “community”, justice, a fair go and the notion that we working towards a better life for everyone in this country by building a better nation.

      That is absolutely dead and has been replaced by get a better job, get rich, screw EVERYONE over and get what you can for yourself.

      It is so utterly pervasive, complete, and ubiquitous – there is simply no alternative voice left in this country, any mention of socially progressive, liberal ideals are shouted down – I am embarrassed to speak publicly amongst many of my friends as their ideas are so regressive and backwards – yet as with all Dunning Kruger devotees they are absolutely assured of themselves no matter how ignorant they are, obviously the more ignorant the more self assured.

      Why would I bring kids into a country filled with this attitude ? Where are we going to go ?

      The first casualties will be crime.

      The theft of the boomers and total disdain for the youth is already breeding a sickening wave of crime, drugs, apathy, and almost total hopelessness amongst our regional youth.

      And that is going to become seriously worse.

      I’m out.

      If people are not going to fight for their country and merely wallow in greed then there is only EVER one result.

      I am an avid student of history and philosophy (have multiple post grad degrees in these areas only out of interest) and the track record across humanity of this type of social regression is absolutely unequivocal – totally and utterly unequivocal – as the economy worsens we are going to see a stronger and more robust shift to the extreme right, doubling down on these terrible policies. With that will come more and more social chaos, more and more poverty, despair, crime, and eventual social decay.

      Progressive, liberal ideas only EVER emerge as a society is forced to band together and work in a collective, communal manner in order to grow and restore what was stolen through sheer greed and the ignorance of its dangers.

      The parallels often mentioned to Detroit and now Chicago (flint, philly, many more) are overwhelming.

      Detroit was absolutely destroyed by far right wing corruption and self serving greed, what tore it apart was truly astonishing in its myopic, solipsism and absolutely ruthless adversarialism.

      We have one or two people murdered on the streets of Melbourne and Sydney, no AUSTRALIA a year – now imagine having 60 people a month. Imagine having someone shot every single day in Bourke St Mall.

      No way – Norway here we come.

      Chicago

      July To Date
      Shot & Killed: 29
      Shot & Wounded: 136
      Total Shot: 165
      Total Homicides: 31

      Year To Date
      Shot & Killed: 218
      Shot & Wounded: 1226
      Total Shot: 1444
      Total Homicides: 252

      http://heyjackass.com/

      • Agree with most of your post but the below is fairly hard to happen in OZ. You simply can’t compare us to the states where you can buy assault rifles from walmart or even online for around a grand (Add to that the culture is very different too). There will be poverty and more crime but i don’t see the possibility of anything like the below happening.

        And best of luck with the new venture.

        “We have one or two people murdered on the streets of Melbourne and Sydney, no AUSTRALIA a year – now imagine having 60 people a month. Imagine having someone shot every single day in Bourke St Mall”

      • drsmithyMEMBER

        Agree with most of your post but the below is fairly hard to happen in OZ. You simply can’t compare us to the states where you can buy assault rifles from walmart or even online for around a grand (Add to that the culture is very different too). There will be poverty and more crime but i don’t see the possibility of anything like the below happening.

        Yeah, we won’t see the murders of the US.

        But be prepared for a hell of a lot more glassings, rapes and beaten wives.

      • Annoying Devil

        +many KM. Bit hard to provide a future for your kids, when Australia doesn’t have one

      • “The parallels often mentioned to Detroit and now Chicago (flint, philly, many more) are overwhelming.

        Detroit was absolutely destroyed by far right wing corruption and self serving greed, what tore it apart was truly astonishing in its myopic, solipsism and absolutely ruthless adversarialism.”

        Nice rewrite of history there… clearly, no one from the Democratic party had anything to do with Detroit or Chicago… clearly, no one at all.

        Your progressive politics ruined those cities. What do we need, more DIVERSITY, when do we need it, NOW! Go on, put more diversity hires in all the cogs of the state. Let me know how that goes.

        Muppet…

      • Fabian AlderseyMEMBER

        “Imagine having someone shot every single day in Bourke St Mall”

        Huh? This is unimaginable even in Chicago. Most murders are committed in people’s homes, by assailants known to them.

        Sure, you can imagine anything you like, but that doesn’t mean it has even the tiniest chance of happening.

      • Pretty much sums up my frustrations and sentiment to the country I was raised in. Its government, policies and people have abandoned the young, so why should the young feel any obligation to stay?

      • Australia’s murder statistics are pretty alarming – we dont need guns to be murderous! !!

  14. So real estate agents have until November 2015 to sell the rest of the country to Chinese infestors before anything will be done about it?

  15. who do we appeal to when laws are broken and nothing is being down??

    federal police?

    state police?

    some watchdog?

    a crime is being committed and nothing is being done

    • Citizens arrest? Hmm… Maybe not… Criminal justice will be all over it. I’ll be surprised if they are not corrupt too.

    • If people want something done – they should go out and burn the empty houses to the ground.

      No corrupt, usurped society has ever – EVER changed without violent insurrection. None.

      I have 600 books on the history of revolution on my bookshelf right now which says precisely that.

      The antagonistic society I studied under Chantal Mouffe for some time amongst many others.

      • St JacquesMEMBER

        Revolution is assured now. It is coming and much quicker than people think can be possible.

      • You don’t need a revolution. Enough people voting for the affordable house party would be a good start. Violecen against the oppressors would be satifsying though.

        However, young voters in this country are complete morons who deserve every bit of rape they get now, and later when they have to support the boomer in retirement. Say what you want about the boomers, but at least they knkw how to vote for their self-interest.

      • Ronin8317MEMBER

        If you burn down the empty house, the insurance payout will make the buyer even richer. How is that suppose to help? You have to focus on the actual problem, which is laws are not being enforced.

        No bubble goes on forever. When the housing market blows up, those Chinese buyers will lose a lot of money.

  16. The new harbourside houses can go with their new cattle stations.

    http://www.agweek.com/news/nation-and-world/3798577-chinese-billionaire-buys-australian-cattle-stations

    A Chinese billionaire has bought two large Australian cattle stations for A$47 million ($34.62 million), in at least the third deal this year involving a Chinese investor buying into the country’s farmlands.

    Xingfa Ma, who owns the Tianma Bearing Group Co, snapped up 40,000 head of cattle along with the 705,700 hectare Wollogorang and Wentworth stations in far north Australia, a person close to the deal said on Thursday.

    Ma already has significant agricultural holdings in Australia, including other cattle stations and a wine group, through the Australian arm of Tianma Bearing.

    Realtors Heinemann Rural and CBRE Australia, a unit of New York-listed CBRE Group Inc, declined to comment on the buyer or details of the deal, but said the property held a strategic position in the red meat supply chain.

    “Wollogorang is located within one of the country’s most unique and diverse regions, with favorable land and soil types supporting what is already a successful cattle breeding operation,” CBRE’S Geoff Warriner said in a statement.

    • Who sold the cattle stations? The owner or the bank? Banks seem to be repossessing farms and selling them off to the highest bidder I’ve been reading.

  17. It’s awesome! Those clever Chinese will own the joint and you will be their servants. I even think they’re smart enough to politically mobilise and promote NIMBY policies to protect their new land holdings, thus guaranteeing dispossession of Australia’s youth. Within a decade they’ll control the land banking companies too, and be able to capture all extra land supply.

    You voted for it Australia! Ha ha ha ha ha!

      • St JacquesMEMBER

        No. Singapore very strictly limits foreign ownership of housing. Most housing is government controlled and for citizens.

    • Now. With this insight let’s have a look at the Cuban revolution. Or, he he, China’s communist revolution. Just take any 3rd world country where the population suddenly finds that the corrupted elite have sold off everything for private profit and are leaving the country with a massive public debt on top of it all.

  18. Honestly I believe it is a big mistake to ban non-residents from owing Australian property. Because we are missing out on getting even more Chinese money 😉

  19. The word is out around the globe quote “if you have dirty money to wash do it downunder where all the actions are happening and where land and houses are still cheap” unquote

  20. The Japanese were buying up a lot of things including properties in the late 80s early 90s. Look at them now. Nothing last forever!

    • … and the Chinese are facing a steeper demographic decline than Japan, with their working age population beginning to shrink in 2016.

      But it’s all cool… there are apparently millions of Chinese millionaires who all want to buy Australian property, and it’s impossible to stop them because Australia no longer applies rule of law (see Tony’s child rape islands for an example).

      The Chinese will be allowed to buy until a prettier asset class or location catches their eye… then they will pile out faster than anyone believes possible.

  21. Received the following unsolicited letter from Haim Real Estate, 792 Burwood Road, Camberwell. The pricks ignored the “no junk mail” sign on my post box.

    What’s the odds this is for a foreigner (named Yang)? And what’s the odds they have a line of foreigners lined up? Feel free to pose as a potential seller wanting to know more about “Yang”.

    —-

    Hello,
    A gentleman ho wishes to buy property in your area, has requested that we write to you to ask if you may be considering selling your property.
    Your neighbourhood has been -specifically- selected as a part of the Stonington & Boroondara area where this person is keen to buy a property. Although we have several properties for sale in the area, none are considered suitable by this person, hence this letter to you.
    This is a sincere request. The name of the interested party is -Yang-. He has the financial capacity to pay a very good price for the right property.
    We are also writing to several other residents in the area with the same request as we are hoping to find a suitable property as soon as possible.
    If you have been considering selling your property, we would be please to advise you whether or not we believe your property would suit this purchaser.
    We hope you don’t mind us writing to you directly.
    Thank you for your time.
    Your sincerely,
    Tony Pappos
    Partner / Senior Sales Executive

    P.S. If you are NOT thinking of selling NOW, but you may be considering doing so in the future, we would be pleased to offer you a FREE estimate of the likely sale price of your property. If you are currently selling with another agent, then please disregard this letter. You can contact me on 0411441182.

    ABN 84 604 937 751 http://www.haimrealestate.com.au Tel: 03 98 133133 Fax: 03 98 133155 Email: [email protected]