Airbnb the new focus for Chinese property investors

Cranes hard at work on the Melbourne skyline.

By MINYUE DING 

Two buildings in Flinders Lane are going to be reconstructed into 100 Airbnb suites, rented out by a real estate agent that caters to Chinese investors.

Chinese investors buying Australian real estate are increasingly investing in properties they intend to rent out on Airbnb, according to real estate agents servicing overseas buyers.

Azone real estate director Alyson Liu said Airbnb offered customers a high-yield investment. 

According to a 2017 report from Chinese real estate website Juwai.com, Chinese investors poured $US17.4 billion into Australian real estate. This makes Australian the second most popular destination for Chinese property investors after the United States.

Australian real estate is attractive to Chinese investors partly because investment is restricted in China, where all real estate is owned by the government and investors can only buy the right to use it for up to 70 years.

Parents of the many Chinese students and young immigrants to Australia are increasingly buying property for their children to live in.

However, Chinese real estate investment has fallen dramatically over the past two years, as the big four banks cut back on financing home purchases by foreigners. According to the Department of Foreign Affairs and Trade, Chinese investment in Australia declined by 22.8 per cent in 2017.    

Real estate social rental company WeaverO agent Matthew Ma said tight money policy resulted in a rare decrease in Australia’s housing price.

Apartment consturction is of interest to Chinese investors.

Landlords have fewer choices. Investors cannot obtain profits by selling the properties, while long-term rental income has flattened. “They get stuck,” he said. 

The slack is being taken up by a big lift in the market for properties purchased for short term rentals. In popular areas such as Box Hill or St Kilda, occupancy can be up to 80 per cent.

Mr Liu said up to 15 per cent of her clients were choosing properties with the intention of renting them out on Airbnb.

Mr Ma said investors could earn $1100-$2000 a month more through Airbnb than they would from long-term tenants.

However, managing an Airbnb property is more work. Traditional real estate agents are increasingly starting to provide management services for their clients who have invested in Airbnb properties.

Mr Liu said there was a lack of supervision over Airbnb. “RTBA (Residential Tenancies Bond Authority) is responsible for the long-term rent, but not for the short-term,” he said. 

Last year, Mr Liu’s cleaning team went to an apartment for the usual cleaning work after a short-term rental. When they opened the door, they were met by a strong, offensive smell. 

The room was full of blood and mess, and signs the clients had taken drugs into the apartment. “We spent six hours cleaning. Usually, it only costs one hour,” Mr Liu said.

“Long-term rent could also face this kind of issues,” he said.

On Saturday afternoon at 2.30, a real estate investment salon was held at Melbourne Square display suite in Southbank.

A group of Chinese investors at a real estate talk.

A presenter from real estate company Holliez Group spoke to about 100 potential investors. This meeting was a part of the marketing for the group’s new property, Melbourne Square apartments, which are part of A$2.8 billion building complex of residential, hotel and commercial towers.

Each person received a gift bag, which included a leaflet giving an overview of Australia’s  tourism market. A form lists the Airbnb housing price in different parts of Melbourne. The figures aim to show that Airbnb property is a high yield investment.

Outside the suite, the cranes stand tall in Melbourne’s CBD skyline.  Neither the heritage buildings in  Flinders Lanes nor the modern superstructures can stop the strength of capital.