What’s China’s Role In the Australian Commercial Construction Market

It might be nearly 7,500 kilometres from the middle of China to the heart of Australia, but the nation’s investors play a significant role in the Australian construction industry. Take a closer look at the impact of Chinese investment on the Australian building sector.

Chinese Investment in Commercial Property is Growing Substantially

Chinese investors have long realised the value of investing in Australian residential property, but recently they’ve taken a significant interest in commercial properties. According to a KPMG report, Chinese investment in Australian commercial real estate quadrupled in 2014 for a total spend of $4.37 billion. Commercial real estate accounted for 46 percent of China’s total Australian investments, compared to just 13 percent the year before. Last year was also the first that the number of Chinese private sector investment deals in Australian commercial construction exceeded those of state-owned bodies.

What Does the Future Hold?

Real estate experts say China will take an even greater interest in Australia’s commercial construction sector in the coming years. ANZ’s Caged Tiger report believes China’s capital account liberalisation could see foreign direct investment rise to as high as US$9.5 trillion by 2030, up from around US$500 billion in 2012.

What Does This Mean for Australia’s Commercial Construction Industry?

To date Chinese investment has had “only a subdued positive impact on commercial property construction,” said David Cannington, ANZ Research’s senior economist. However, if China’s investment trend continues as experts predict, it stands to reason that the positive effects for Australia’s commercial builders will be even more pronounced. That’s good news for commercial construction firms, but it could disadvantage Australian investors who might struggle to secure the services of busy construction firms and find prices rising due to increased competition. If you’re concerned about these factors, speak to TPM Builders at 1300 733 891. Our tender pricing is always transparent and we promise to give your project the full attention it deserves. As Chinese investors look beyond the residential sector and to the possibilities of commercial construction in Australia, they will have a significant effect on local commercial ventures. Image via Flickr by mikecogh