Chinese are attracted by property........
- From: cnw <cnw@xxxxxxx>
- Date: Mon, 04 Sep 2006 02:57:30 +0800
Rich comrades snap up our units
Chinese are attracted by property showpiece, writes China correspondent Rowan
Callick
--------------------------------------------------------------------------------
September 04, 2006
PEOPLE'S Liberation Army guards parade outside the lush grounds of the Daioyuta,
the Government guest house in western Beijing.
Invitations are carefully scanned before access is granted. Most visitors then
proceed in chauffeur-driven cars, across exquisite bridges and alongside
willow-lined lakes.
Inside, in a room most famous for housing the Six Party Talks that are
attempting to resolve the nuclearisation of North Korea, about 70 wealthy
Chinese, many of them property developers, are listening eagerly to the wisdom
of a distinguished-looking, bearded foreigner. He is speaking in front of a vast
aerial photograph of Sydney, over which are superimposed the Chinese characters
for: "Property Development in Harmony With Your Environment" - "harmony" being
the buzzword currently most used by Chinese leader Hu Jintao.
The speaker is Bob Rose, founder and chairman of family-owned development
company Rosecorp.
The atmospherics of the presentation are about sharing philosophies of
development, but the nitty-gritty is about selling units - especially in
Rosecorp's showpiece, the 52ha development at Breakfast Point at Concord on
Sydney's Parramatta River, with views over the water to the city.
He's speaking to an audience of people who don't invest lightly, but who are
well disposed to setting up a second, third or fourth home in Sydney - if they
haven't already done so.
They like the physical features - the space, the golf, the weather - and the
comforting size of the local Chinese community.
Even more, they like the idea of getting away from the increasingly awkward
social climate in China. There, everyone is encouraged to work hard to make
money, but people with wealth are discouraged from flaunting it, provoking the
poor and thereby inconveniencing the authorities.
Hong Kong's most exclusive designer boutiques and restaurants are increasingly
full of fabulously wealthy "mainlanders" who emerge like butterflies from
chrysalises once they leave their struggletown bases in provincial China.
But Hong Kong is also sovereign Chinese soil, where personal and commercial
behaviour is comparatively easily reviewed by parties with an interest back
home.
Australia may have its many Chinese snoopers, as diplomatic defector Chen
Yonglin has detailed, but they are focused on the "five poisonous groups" among
overseas Chinese communities: supporters of democracy, of Tibetan Buddhism, of
independence for Muslim Xinjiang, of Taiwan and of Falun Gong.
The rich - among whom an unusually high proportion are also communist party
members, who comprise just 5 per cent of the whole population - aren't on this
list. But they do appreciate the security offered by communities such as
Breakfast Point - especially since many start investing in Australia by
providing a unit where their children can safely stay while studying.
Rosecorp has Foreign Investment Review Board approval to sell 50 per cent of
Breakfast Point to overseas buyers, in line with the usual FIRB pattern. And
mainland Chinese are already the biggest foreign grouping among the 700 units or
houses sold there to date, almost 10 per cent.
Rose's timing with his foray into Beijing is good. It fits well with trends in
Australia and in China.
The market is coming off a little in both places as interest rates rise in both
countries. And while one questioner at the Diaoyutai presentation last Thursday
did ask about the prospect of raising a mortgage in Australia - Rose answered
affirmatively - most buyers from China are more likely simply to pay in cash.
Where Japanese investors helped buoy key property markets in Australia in the
1980s, followed by Hong Kongers seeking a safe haven before the handover to
China in 1997, it is now the turn of the People's Republic to help push upmarket
real estate back up - echoing the splendid role played by the same country's
demand for commodities in pushing up the prices for Australia's resources.
Kym Hewett, Australia's senior trade commissioner in China, told the group at
the Diaoyutai that two-way investment remained a soft spot in the strong
economic relationship between the countries, and that real estate was a
significant starting point because it had natural connections with other areas
encouraging enmeshment - such as migration, education and tourism.
It is also the form of investment by far the most likely to lead, eventually, to
much bigger commitments by Chinese entrepreneurs.
Some Australian states keep sending costly fishing expeditions to China looking
for that investor who, caught and reeled in, will spend millions on a
job-creating greenfield project that the premier can declare open in time for
the six o'clock TV news.
They're mostly whistling in the wind. Big state-owned enterprises in China may
occasionally take such a plunge - but in Australia this will essentially be
restricted to the resources sector, meaning the sunshine states west and east.
Truly private Chinese entrepreneurs operate in a different way. They want to
feel comfortable about a place, they want to understand how it ticks, before
they put their money into a new operation, or even into a merger or acquisition.
That means, most likely, starting with a property, somewhere they will stay for
increasingly long visits - and where it's sensible to hedge their bets a little
by keeping some of their fortune offshore and yet accessible.
Zhu Zhong-yi, the secretary general of the Chinese Property Association, an
offshoot of the Construction Ministry, told the meeting: "Australia is a
beautiful country with expensive land, rich resources, many new property
developments and great potential.
"Many Chinese property developers have already been seeking opportunities in
Australia." In comparison, the Chinese Government had recently "released
regulations to restrict foreign investment in our property market".
Rose is also looking for opportunities in China but says he's not prepared to
sacrifice the principle of maximising community space in a project - which may
rule him out of much of the country, where officials and developers usually
celebrate maximising the number of occupants per square metre.
There were some sharp breaths taken in when he said he usually only covered
20-25 per cent of a site with buildings. Beyond the sacred state and party
precincts, Beijing is in the final throes of being made over as a city gasping
for air beneath fresh layers of concrete.
Rose and his wife Margaret talked of their commitment to traditional building
styles - whereas the developers of China are today mostly turning their backs on
the country's millenniums of tradition and earnestly grasping for novelty and
modernity.
Margaret Rose spoke of the importance of designing a first-class kitchen as "the
hub of the house". Again, breaths taken in. In the homes where her Beijing
audience live, most meals are eaten in restaurants - or, if in the flat or
house, are cooked by a servant in a small kitchen that may not often be visited
by the members of the family.
Not many eyebrows raised about the price - houses costing up to $4.25 million
are not out of the range of rich comrades these days. But questions were asked
about whether there were any formal obstacles to Chinese people buying there,
whether the price charged to foreigners and local buyers was the same, and -
naturally in a room with plenty of developers - the potential for appreciation.
The answers were no, yes and yes.
Bob Rose says: "There are some investors among them, but a lot live in the
property they buy - when they come to Sydney."
The bottom line, he says, is simply that "they fit in very well" to the
Breakfast Point community. "They assimilate well. That's Australia, isn't it?"
And for most Chinese the concept of assimilation is a welcome one - they come
from a community where standing out usually creates problems.
.
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