Chinese specufestors blow millions in Aussie property bust

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Via Caixin:

John Wang had so much faith in property sales agency Ausin Group that he handed over A$765,000 to buy his third Australian apartment without asking for a receipt.

“I had already bought two properties through Ausin and I had such deep trust in them that I didn’t even bother to get a receipt when I paid the full amount on the third property,” said Wang, a retired businessman from Shanghai.

His blind faith in the property sales agent backfired earlier this year when the company’s China business collapsed, resulting in 130 failed residential property settlements in Australia. More than 100 Chinese property investors like Wang have lost millions of dollars in deposits and payments for off-the-plan houses and apartments in Sydney, Melbourne and Brisbane.

Mary Wu, a retired business executive from Shanghai, recalls being on a bus in Melbourne in March this year when she impulsively bought a 280-square-meter (3,014-square-foot) house in the Victorian capital. She was in Australia on a trip organized by Ausin for potential investors at the time and was so impressed with the company’s sales pitch she did not hesitate.

Her payment of $490,000 went through several months later, but she says the developer never received the money. Wu had already bought a house in Brisbane though the same agent two years earlier without any problems.

Like many of the Chinese investors using an intermediary to pour savings into off-the-plan homes on Australia’s eastern seaboard, she was impressed by the “high-quality” Ausin sales staff who were “handsome and with good manners” and excelled in maintaining long-term relationships with their cashed-up clients. “The Ausin properties seemed like a great wealth management product, which guaranteed a five-year lease and 10% return,” she says.

…However, the problems at Ausin run deeper than the failure of a single property agency. The investors’ stories show how the combination of China’s tight controls on capital outflows and regulatory changes in Australia which forced banks to restrict home loans to foreign investors ended disastrously.

…Carrie Law, chief executive of online property group Juawi.com, said Chinese buyer demand for Australian property continued to grow this year after falling in 2017.

“Wealthy Chinese are interested in two things: wealth preservation and lifestyle. Sydney is perfect for both. Sydney is a stable market with good long-term growth prospects. It’s a safe harbor, both physically and financially.”

Whatever you say, Carrie:

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.