In Australia, there is effectively bipartisan support for foreign investment in real estate. And in Sydney, people are living in a city where the cost of living is extremely high. In a recent study, we found high levels of public concern about Chinese investment amongst Sydneysiders, including claims that Chinese investors are pushing up housing prices in Sydney.
The Australian government noted recently that the quantitative data on individual foreign investment in residential real estate is unreliable in Australia. Notwithstanding the capital flow data problems, according to some of the more reliable data sources, taken here from the 2015-16 Foreign Investment Review Board annual report,
“Australia continued to be a significant destination for foreign investment in 2015-16. The value of approved investment rose to around $248 billion, an increase of over $55 billion on 2014-15. This was predominantly driven by increased investment in the real estate sector. China ($ 47.3 billion) remains our largest source of approved foreign investment, followed by the United States ($ 31.0 billion).”
China has been one of the largest sources of foreign real estate capital in Australia since 2009 and reportedly, Sydney has received more Chinese investment in residential real estate than any other Australian city.
Within this context, we surveyed almost 900 Sydneysiders to investigate their views about individual Chinese investment in residential real estate (see here for important distinctions between investment groups and types). The survey obtained the views of people aged over 18 who live in the Greater Sydney region. It posed questions on housing affordability, beliefs about what influences Sydney house prices, views on foreign investment, and the perceptions of Chinese investors specifically.
Support for the government’s foreign investment rules was not strong. Almost 56% of all participants believed foreign investors should not be allowed to purchase residential real estate in Sydney. In contrast, 18% believed foreign real estate investment should be permitted.
Over 63% of participants disagreed that the "government should encourage more foreign investment in greater Sydney’s housing market". Only 12.3% of participants agreed with this statement.
These views contrast strongly with the federal government’s pro-foreign investment position.
The dilemma for the federal government is how to manage individual foreign real estate investment alongside an increasing housing affordability problem in major Australian cities.
We found in other studies that members of the public in Australia misidentified ethnic Chinese Australian citizens who were buying Australian real estate as being “Chinese bidders” and “Chinese nationals”. Our survey results lend support to the calls for the government to roll out strategies to protect Australia’s intercultural community relations alongside their pro-foreign investment policies.
The cultural politics of foreign real estate investment became more visible in Australia when the federal government’s geopolitical commitment to Asia was entangled with the media reports linking Chinese investors with increasing property prices and corruption. This was particularly the case with the commentary associated with the 2014 Parliamentary Inquiry into Individual Foreign Investment in Residential Real Estate.
Some analysts, lending support to the federal government’s pro-Asia geopolitical position, have argued that Australia is in a unique position with respect to Asia because more
“Than 8% of Australia’s population was born in Asia. This is a much higher percentage than in other Anglophone countries such as the U.S. (4%) and the UK (2%). Asian Australians bring with them linguistic skills, social networks and cultural knowledge, which can enhance links between Australia and Asia. But their role and contribution are insufficiently recognized.”
But the need for frequent political reinforcement of these cultural, language and geopolitical links is a recurring theme in Australia.
The Chinese diaspora is increasingly mobile throughout the Asia-Pacific region. Not only are they a powerful force in the residential real estate market as property consumers, but these new Chinese investors and migrants have complicated cultural identities and nation-state allegiances.
Much of the existing research considers international education, foreign investment, and migration as largely distinct flows. These studies often fail to account for the way the new middle-class from China are bringing international real estate, temporary or permanent migration and educating their children at foreign universities together as an integrated familial strategy. Many of these this new middle class, China transcend static cultural stereotypes.
This data blind spot is further compounded by the lack of fine-grained data about how foreign capital and investors is impacting specific neighborhoods and developments in Australian cities.
Therefore, we did not set out to compare public attitudes against the empirical evidence about how Chinese investment is shaping Sydney.
What’s significant about the results of our survey is that Sydneysiders have strong views about Chinese investment, despite the absence of reliable, fine-grained empirical data about their motivations and impacts.
Indeed, participants’ concerns about foreign investors and investment were consistent with their concerns about the government’s foreign investment rules in our survey.
Around 63% of participants identified the Chinese as the bulk of Sydney foreign investors. And given the concentration of Chinese investment in Sydney and Melbourne, this is likely to be accurate.
But most concerning was the response to the statement “I welcome Chinese foreign investors buying properties in my suburb”. Over 48% of participants disagreed, while 16% welcomed the idea.
The potential for public confusion when distinguishing between domestic Australian-Chinese and international Chinese buyers is an important context for understanding these responses. But so too is understanding the long-term migration and education plans of the investors. Different investor groups will interact with the city in different ways, and their impact on society can be vastly different too. For example, absentee super-rich investors will have a different impact on neighborhood life when compared to newly arrived middle-class migrants.
If the federal government wants to court foreign investment, then better education about the possible risks and benefits of individual foreign real estate investment is needed. Our findings suggest that the pro-foreign investment stance must be accompanied by strategies to protect intercultural community relations in Australia.
This article was originally published in CPI Analysis. The News Lens has been authorized to republish this article.
TNL Editor: Edward White
