Seismic shifts in Chinese investment in Australia

Doug Ferguson, Partner in Charge, Asia Business
Doug Ferguson, Partner in Charge, Asia Business

On Monday, Premier Mike Baird launched our latest report Demystifying Chinese investment in Australia at an official state event hosting very senior Government and business leaders from Guangdong Province in China.

This is the tenth report in our China investment series, researched and prepared by KPMG, University of Sydney and for the first time, Knight Frank.

Dramatic structural changes have driven strong shifts in the sector, number and types of deals being made by Chinese investors in Australia. For the first time nearly half of investment was concentrated in commercial real estate transactions, with investment in infrastructure also increasing significantly. Also for the first time, Chinese private sector investment exceeded state-owned enterprise investment, both in terms of volume and value.

Australia still has so much to offer China in these sectors and, beyond that, a number of innovative and important platforms have evolved in the past 12 months to ensure Australia remains an attractive destination.

 

Key findings

Chinese investment fell 9.1% for the second consecutive year to USD8.35 billion (AUD9.5 billion), largely due to lower levels of new mining and energy sector investment which represented only 18% of the total in 2014;

Four mega sized deals (over AUD500 million) accounted for 41% of the total: CCCI / John Holland, Wanda / Hoyts, Baosteel, Aurizon / Aquila and the 99 year of Port of Newcastle by China Merchants Group and Hastings Funds Management;

Following on from trends noted in 2013, there has been a seismic shift in patterns of Chinese investment which far more industry sector activity in real estate, infrastructure and leisure sectors by Chinese private companies;

Investment in commercial real estate represented 46% of the annual total, up from 14 percent in 2013;

For the first time, private Chinese companies invested more than the state sector, representing 85 percent by number of transactions and 66% of total value;

Given 7 out of the 8 largest deals were located in NSW, NSW received 72 percent of Chinese investment in 2014, and;

Agribusiness, despite all the noise, only accounted for 1 percent of completed Chinese investment. However we expect 2015-16 to be far more active for the agribusiness investment sector.

Download the full report.

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