Hong Kong protests fuel buyer interest in Australia, New Zealand luxury homes

Mell Chun and Jonathan Barrett, Reuters

Posted at Aug 27 2019 11:02 AM

FILE PHOTO: An aerial view of houses located in Sydney's eastern suburbs, Australia, June 5, 2014. David Gray, Reuters

SYDNEY - Hong Kong buying enquiries for expensive Australian and New Zealand homes have ramped up due to anti-government protests in the Chinese-ruled city, according to property agents and real estate data, as wealthy investors look for a safe haven.

Jamie Mi, partner at Melbourne-based Kay & Burton, said the real estate agency was receiving about one-third more enquiries from Hong Kong buyers than usual, with most buyers targeting high-end properties priced above A$5 million ($3.4 million).

She said the protests in Hong Kong had "accelerated the motivation" in the past month for wealthy buyers to look for residential properties to move their money into.

The protests, triggered earlier this year by a proposed extradition bill that would allow individuals to be sent to mainland China to face trial in courts controlled by the Communist Party, have become more violent in recent weeks.

Police for the first time used a water cannon to combat protests on Sunday, while some protesters threw petrol bombs at police.

Juwai.com, China's largest international property website, recorded a 50 percent increase in Hong Kong enquiries for Australian properties in the past quarter.

"In the current environment, Australia appears as a safe harbor — both comfortably close and far from home," Juwai.com executive chairman Georg Chmiel said in a statement to Reuters.

Buying real estate in Australia and New Zealand does not grant Hong Kong investors residency.

Several real estate agents said the buying enquiries are likely coming from wealthy foreigners who are already allowed to reside in Australia or New Zealand and who are possibly planning an exit strategy from Hong Kong.

Australia is seeing an increase in interest in its millionaires-only visa program from wealthy Hong Kong residents who are eyeing a safety net amid political turmoil in the Chinese-ruled territory.

Under the program, people can obtain a provisional visa if they invest at least A$5 million ($3.4 million) into complying investments in Australia.

New Zealand has similar investor visas that require a minimum NZ$3 million ($1.9 million) spend.

Another factor behind the spike in buying enquiries in Australia and New Zealand is the economic impact the protests are having on the Asian financial hub, which is now facing its first recession in a decade.

James Chan, from Bayleys Real Estate in New Zealand, said enquiries had been ticking up ever since the protests intensified. "They are starting to think about how to protect their money - they need to look for a safe haven," he said.

Official figures suggest the overall level of foreign home buying in New Zealand is relatively low - about 3 percent of property transfers nationwide - however the data does not capture property bought through trusts.

Australia's property sector has long been a favored destination for foreign buyers, especially Chinese, although demand has been tempered in recent years by rising state taxes on foreign purchases.

Australia and New Zealand have also introduced tighter regulations on foreign purchases of established homes in recent years, pushing Chinese investors towards new apartments.

Government data on foreign property investment for 2018-19 has not yet been published. The year before, Chinese investors were by far the single biggest group of foreign buyers of Australian real estate, accounting for A$12.7 billion ($8.6 billion) in purchases. Hong Kong investors spent A$2.8 billion ($1.9 billion) that year. ($1 = 1.4806 Australian dollars) ($1 = 1.5620 New Zealand dollars)