September 28, 2023

Taking shelter – Chinese real estate capital in Australia and New Zealand


Taking shelter: Chinese real estate capital returning to Australia and New Zealand

Source: KPMG/Sydney University database
Note: Prior year annual figures are updated with the latest
information as new information becomes available and as required.

Discussions with Chinese background developers across $1.5bn of pipeline opportunities indicate a clear intent to accelerate pipeline residential projects to take advantage of the current housing shortage in Australia and New Zealand’s capital cities.

With higher borrower rates, interest in residential projects is shifting quickly from house and land packages to apartments, driven by affordability and borrowing capacity concerns. Affordability is a key concern with mortgage payments now consuming 40% of income. Rent growth is projected at around 8-10% (UBSe), and rental vacancy rates remain below 2% in all capital cities (JLL).

The Merricks Capital Partners Fund (the Fund) currently has a 10% allocation to residential and residual stock facilities, and we expect this to increase a further 10-15% over the next quarter with two potential loans in due diligence and forecast to settle by December.

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