Facts & figures
Key findings
- From 3% to 8% Rise in Chinese investment in agribusiness
- Real estate dominated 36% of Chinese direct investment in Australia was in property
- Record of 12 deals In the agribusiness sector, worth $1.2 billion
News_
Chinese investment in Australia at highest level since GFC: new report
1 May 2017
Chinese investment in Australia reached $15.6 billion in 2016, the highest level since its 2008 peak, according to the latest 'Demystifying Chinese Investment in Australia' report by the University of Sydney and KPMG Australia.
Record investment in infrastructure and agriculture helped propel overall Chinese investment in Australia to $15.36 billion, according to a new report by KPMG Australia and the University of Sydney.
Continuing last year’s growth trend, a record number of 78 deals saw Chinese companies continuing to diversify their investments into different industries and geographies – with energy sector investment surpassing mining for the first time.
The findings are detailed in the latest Demystifying Chinese Investment in Australia report, analysing Chinese outbound direct investment into Australia in calendar year 2016.
Australia has proven itself to be a preferred destination for Chinese capital, but we must be cognisant that the growth in investment is slowing compared to other parts of the world such as the United States and the EU.
Professor Hans Hendrischke, University of Sydney Business School
“Going forward, efforts by the Chinese Government to increase oversight and accountability for overseas investments as well as geopolitical factors are expected to have an impact on investment flows globally,” co-author of the report, Professor Hans Hendrischke from the University’s Business School and China Studies Centre, said.
On the international stage, Australia maintained its position as the second largest recipient of aggregated Chinese direct investment, attracting around US$90 billion since 2007, behind the United States, which received more than $100 billion of investment in the same period. However, Australia’s relative growth has fallen behind other countries.
In Australia, commercial real estate remained the dominant sector for investment for the third year running, accounting for 36 percent of the total deal volume. However the nature of real estate investment shifted significantly in the past twelve months, with residential development sites (commercial developments) accounting for 51 percent of real estate deal value in 2016 (compared to just 27 percent in 2015, when office investment was dominant).
2016 was a breakthrough year for Chinese private company investors, who accounted for 76 percent of deal number and nearly half of the total project value.
“There are signs of a growing maturity by Chinese investors in the Australian market – with more private company investment and a higher number of joint ventures alongside more repeat investments by established Chinese companies,” commented report co-author, Doug Ferguson, Head of Asia & International Markets, KPMG Australia.
“The past year was a breakthrough year. Despite the impact of uncertainties about Australia’s foreign investment review regime, Chinese investment in Australia continued to diversify and records were smashed.”
Professor Hendrischke added, "2016 was a peak year for Australia, but Chinese investment in the US and EU is growing much faster: by 200 percent and 77 percent respectively, compared to below 12 percent for Australia."
Knight Frank contributed data and analysis on real estate transactions, and Powell Tate provided insights on gaining a social license to operate in the agribusiness sector.