Monthly Archives: January 2019

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Chinese investment in Australian property drops 69pc

Signs are emerging that the capital inflow from China to Australian property is slowing, but is being offset by Singaporean investors.
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In the first half of this calendar year, Chinese investment in Australian real estate fell 69 per cent, compared with the same period last year.

According to Cushman & Wakefield, despite lower Chinese investment, Australian commercial real estate is on track for another robust year, with the firm’s research forecasting total investment of around $30 billion for the year.

This follows reports last week that China has put the brakes on its companies pouring big money into overseas property development, issuing rules likely to have a significant impact in Australia.

China’s State Council, or cabinet, announced the first rules on overseas investment by Chinese companies on Friday.

Areas now banned from investment include casinos and defence technology, while overseas property development and hotels are classified as “restricted”.

At the root of the latest guidance, the government expressed concern over the challenges of global investment activity, looking to reduce risks to Chinese businesses and ultimately the Chinese banking sector through closer monitoring of such investments.

James Quigley, head of capital Markets, Australia and New Zealand for Cushman & Wakefield, said in the first half of 2017, the largest source of foreign capital for Australian commercial real estate was from investors from Singapore, while Hong Kong investors were responsible for recent landmark deals in Australia and London.

“These included 20 Bond Street in Sydney and the record ??1.15 billion purchase of London’s Leadenhall Building, known as the ‘Cheesegrater’,” Mr Quigley said.

“Despite the decline in investment from mainland Chinese, Australian property investment volumes are on track for another robust year supported by investors from Singapore, Hong Kong, the US and Germany as well as local institutions such as Dexus and Charter Hall.”

He said the relative lack of Chinese investment activity in Australia is interesting given Sydney ranked as the most preferred real estate destination in ???a recent Asian investment survey.

Some of the bigger casualties include HNA, Dalian Wanda, Fosun International and Anbang, which have been put under greater scrutiny by the Chinese regulators.

Investments in film industries, sports and entertainment are now also classified as “restricted”.

The new guidelines on outbound investment effectively codify previous tightening measures and apply specific attention to overseas investment in the property and hotel sectors. The regulations are designed to reduce risk to Chinese businesses, and ultimately the banking system, by facilitating the “continuous, orderly and healthy development of overseas investment”.

Dalian Wanda has begun to restructure its business, which includes two $1 billion Australian apartment projects at Circular Quay and on the Gold Coast, plus the Hoyts cinema chain.

John Sears, the national director, research at Cushman & Wakefield, said some of the many reasons behind the decline include limited available assets, some lumpy investment in 2016 and changing regulations relating to Chinese outbound investment.

“Areas which experienced the largest drop in Chinese investment volumes half-on-half were development sites and hotels, down 85 per cent and 67 per cent respectively,” Mr Sears said.

“Investment in retail rose from a low base, just $8.2 million in the first half of 2016 with the largest transaction in 2017 being the Arena Shopping Centre, $36.6 million, in Victoria.”

Mr Sears said there are concerns about the potential impact of a further drop in Chinese investment on the Australian commercial real estate market.

“While new capital guidelines for mainland Chinese investors will mean more controlled investment, overall volumes are expected to remain firm and demand for Australian commercial real estate remain robust supported by inquiry from a variety of global sources including Singapore and Hong Kong,” Mr Sears said.

The drivers of lower investment are also a range of other local factors, particularly relating to residential development.

“For example, changing market conditions, overdevelopment in some areas and efforts by Australian authorities to dampen the residential market may have contributed to the decline by Chinese investors in development sites.”

Hotel investment in early 2016 was also characterised by a few big transactions, including W Hotel , Sydney, worth $379 million and The Ribbon at Darling Harbour, worth $131 million, which, combined with less opportunities for investment in 2017, helped result in a drop in transaction volume

Mr Sears said it was important to note that the Chinese government is not banning outright overseas real estate and hotel investments and some sectors.

“For example, logistics could receive increased interest following its inclusion in the ‘encouraged’ investment category. Additionally, research and development centres in business park-type facilities may receive additional capital allocations,” Mr Sears said. ???

This story Administrator ready to work first appeared on Nanjing Night Net.

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Wallabies rue letting All Blacks off the hook

A bitterly disappointed Michael Cheika admits the Wallabies wasted a golden chance to end their long drought across the Tasman in Saturday’s heart-stopping Bledisloe Cup defeat.
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SO NEAR BUT YET SO FAR: Wallabies skipper Michael Hooper is a picture of despair after New Zealand’s great escape in Dunedin. Picture: AP

New Zealand retained the coveted trophy by overcoming a vastly improved Australia, winning 35-29 courtesy of a last-gasp Beauden Barrett try.

Kurtley Beale looked to have pinched it for the Wallabies with four minutes to go, leaping over for the team’s fifth try to put them ahead 29-28 in Dunedin and on course for a first win in New Zealand since 2001.

But Barrett drove a dagger through the visitors’ hearts with a near-instant response to seal a dramatic series win –the 15th in a row for the All Blacks –with his second try of the night.

Cheika was somewhat sour post-match and rued a number of on-field calls.

He reckoned Brodie Retallick should have been yellow-carded for up-ending Ned Hanigan in a lifting tackle he said could have broken his neck.

But while he felt Australia deserved to win, he said they spurned their opportunities.

“Any of that stuff does not in any way excuse not finishing the game off,” Cheika said. “We should have won that game. We know it. We should have sealed that game off. The gallant loser thing’s not on.”

Australia twice came from behind but will live to regret not making the most of a dream start.

At one stage they were 17-0 ahead, with Israel Folau scoring a 70m intercept try after just 26 seconds.

But Bernard Foley’s wayward goalkicking at the indoor Forsyth Barr Stadium cost the visitors nine crucial points –and probably the match.

Australia would have been 24-7 up after half an hour had Foley not missed two conversion attempts and a penalty.

Instead, they clung for dear life to a three-point lead at the interval and lost their lead when Barrett barrelled over in the 63rd minute.

Foley missed another conversion minutes later after Will Genia crossed, hitting the upright for the third time to leave the door open for the world champions.

He finished with two goals from six attempts.

While the Wallabies kept on coming –helped by three New Zealand tries that were disallowed by television match official Rowan Kitt –they ultimately could not deny the hosts.

“They played some good rugby tonight and they’ll be disappointed. They could have easily won the match,” All Blacks coach Steve Hansen said.

“They’ve got to be pleased with themselves.”

* South Africa scored five tries as they thumped hosts Argentina 41-23 in the Rugby Championship.

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Powell could boost Vikings after three-month Wallabies snub

Vikings training on Saturday afternoon. Wharenui Hawera Vikings training on Saturday afternoon. Wharenui Hawera
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Wallabies scrumhalf Joe Powell could be a surprise inclusion to boost the Canberra Vikings as the newly-formed club prepares to start the National Rugby Championship season.

The Vikings will find out early this week if the Wallabies will clear Powell to play the season-opener against Queensland Country at Viking Park on Saturday.

ACT Brumbies skipper Sam Carter is also expected to use the first game of the NRC campaign to launch his bid for a Wallabies recall.

Powell has played just 126 minutes in the past three months after missing selection for the first two Bledisloe Cup matches and being used sparingly in the mid-year Test series.

Wallabies coach Michael Cheika has opted for a No. 9 combination of Will Genia and Nick Phipps, despite Phipps struggling to break into the NSW starting side in the Super Rugby season.

Powell’s lack of game time will almost certainly see him join the VIkings given he hasn’t played a game since the Brumbies were knocked out of the Super Rugby finals in July.

The 23-year-old could reunite with Brumbies halves partner Wharenui Hawera, who has bypassed New Zealand’s provincial competition to play in his first NRC season.

New Zealand-born Hawera is keen to use the NRC to continue his development after being plucked from obscurity earlier this year to join the Brumbies as the club’s chief playmaker.

Hawera was one of only two players to play every game for the Brumbies, staying on the field for all but 15 of the 1280 minutes in his debut Super Rugby season.

Hawera hopes the less intense NRC environment will allow him to show his attacking spark as the next step in his career.

“I’m extremely excited … Playing Super Rugby there is a lot of pressure but I’m excited for the NRC and probably try to practice a few things I wasn’t able to do for the Brumbies,” Hawera said.

“Just looking to offload a bit more, run more and have a lot of support play. Rather than just dishing the ball out, looking for the second touch.

“From what I’ve heard, that’s what this competition is about – scoring points and having fun.

“Hopefully we can have a real crack. We’ve got a strong team on paper, but we’ve got to be able to put it out there. As a No. 10 and a leader, hopefully I can bring some flair and we can put it together.”

The Vikings will wear an ACT Kookaburras heritage jersey for the first game of the season in a bid to mend bridges and garner support in a divided Canberra rugby community.

There is still lingering angst about the Vikings Group taking ownership of the Canberra representative team.

The Vikings Group will spend $250,000 per season for the NRC licence after ending a three-way venture with the Brumbies and University of Canberra.

It is hoped a nod to the Kookaburras – the ACT’s traditional rugby representative team – and their colours will help build a new supporter base, while the Canberra junior rugby finals will be played as curtain-raisers to the NRC.

VIKINGS’ NRC DRAW

September 2: Canberra Vikings v Queensland Country at Viking Park, 1pm.

September 10: Canberra Vikings v Perth Spirit at Viking Park, 1pm.

September 17: Brisbane City v Canberra Vikings at UQ Rugby Club, Brisbane, 1pm.

September 23: NSW Country Eagles v Canberra Vikings at Bellevue Oval, Armidale, 1pm.

September 29: Canberra Vikings v Fiji at Viking Park, 7.30pm.

October 8: Melbourne Rising v Canberra Vikings at Frankston Park, Frankston, 1pm.

October 15: Canberra Vikings v Sydney Rays at Viking Park, 3pm.

October 29: Greater Sydney Rams v Canbera Vikings at TG Millner Oval, Sydney, 3pm.

This story Administrator ready to work first appeared on Nanjing Night Net.

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The problem with property doomsayers

The team at ABC’s Four Corners assembled a thrilling package about the Australian property boom last Monday.
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It came replete with forecast of the “perfect storm” for property and an inevitable popping of the property “bubble”.

Most concerning was the interview with a young couple, on average incomes, who professed their aspiration to own 20 investment properties and sip pina coladas to celebrate.

It’s true that the biggest threat to the housing market is the extent to which naive borrowers have been able to over-leverage on property portfolios.

If – and I stress “if”- some economic shock caused a rise in the jobless rate, these borrowers would no doubt be left high and dry. Their forced sales would no doubt create downward pressure on prices.

We are left to trust that banks and mortgage brokers have conducted the proper checks to weather inevitable rises in borrowing rates. But there are many reasons to be less concerned about all the dire warnings about property (much to the dismay of many would-be buyers).

Absent a rise in the jobless rate, which has been falling recently, it’s hard to see where the trigger for forced property sales would come from. In times of price weakness, home owners tend to just sit on their properties, keeping volumes low and price falls capped.

Australia has never seen a precipitous fall in house prices, as has occurred overseas. Price booms tend to be followed by period of price stagnation, rather than falls. Australian banks have never been willing to offer “no recourse” loans as in many other countries, like the US. If a mortgage holder can’t pay, their house is repossessed and the bank recoups its money. In other countries, many borrowers can just walk away, and do.

Australian mortgage holders, by comparison, will keep paying the mortgage until it is absolutely impossible.

The other unique feature of our housing market is the degree to which people have variable interest rate loans. This makes us incredibly sensitive to changes in interest rates. Indeed, some of us make a very good living feeding Australian’s obsession with interest rates and house prices.

This sensitivity to interest rate changes makes monetary policy – the setting of borrowing rates by the central bank – a potent tool of economic management.

Perhaps the biggest reason to believe Australia’s property boom won’t go spectacularly bust is that the Reserve Bank won’t let it happen.

There is good reason to believe that future interest rates will remain lower than they have in the past.

Those who paid mortgage rates of about 10 per cent prior to the global financial crisis may yet earn the same sort of bragging rights over future generations that those who endured 20 per cent rates did.

To the extent borrowing rates are likely to remain lower, that just means people have had a rational reaction to borrow more, because they can afford to service higher debts. If borrowing rates returned to where they were, of course, there would be widespread misery.

The Reserve Bank shocked financial markets in July by releasing minutes of its July board meeting revealing board members had talked about the concept of the “neutral interest rate”.

That’s econo-speak for the interest rate at which monetary policy is neither expansionary or contractionary in its impact on the economy. The neutral rate is the rate consistent with full employment and maximum output growth without spiralling price pressures.

It’s the level you would expect interest rates to return to when the Reserve Bank feels its job of trying to stimulate the economy with record low borrowing rates is done.

Back in the early 2000s, then Reserve governor Ian Macfarlane estimated the neutral rate for the official cash rate was about 5.75 per cent. That’s a neutral real interest rate of 3.25 plus inflation of 2.5 per cent, plus a retail margin for the banks to get a headline mortgage rate – the rate people actually have to pay – of about 7.5 per cent.

According to the Reserve’s latest analysis, the neutral official cash rate had fallen from 5.75 per cent to just 5 per cent.

In the July minutes, it estimated the neutral official cash rate today has fallen to just 3.5 per cent.

Remember that the official cash rate today stands at 1.5 per cent, meaning interest rates would only have to rise 2 percentage points before the Reserve Bank could consider that its job of removing monetary stimulus was done. Game over.

That is less than has been required in the past and reason to believe that this tightening cycle – when it comes – will be more gentle, to avoid the very problem canvassed by Four Corners.

Why should we believe that the neutral level of interest rates has fallen?

Partly it’s because of the indebtedness of households. Because we’ve borrowed more, it doesn’t take as much to crimp household cash flows with even small interest rate increases.

The lower rate of productivity growth in the economy is also part of the reason. When economic growth is more sluggish anyway, you don’t have to do as much to pull on the reins.

Things could change and interest rates may need to rise by more. The Reserve’s minutes warn that “a reduction in risk aversion and/or an increase in the potential growth rate could see the neutral real interest rate rise again”.

But for now, it’s unlikely that a campaign of aggressive interest rate rises will be responsible for triggering the sort of property collapse that many fear.

There may be other external shocks that bring us undone. But the more likely scenario is a slow deflation of our property boom and prolonged high prices.

The majority of Australians, as homeowners, will still probably think that’s a good thing.

This story Administrator ready to work first appeared on Nanjing Night Net.

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Fleeing former Thai PM spotted

Bangkok: Former prime minister Yingluck Shinawatra has left her 15 year-old son in Thailand and will seek asylum in the United Kingdom after failing to show up for a negligence trial in which she faced 10 years’ jail, according to sources in her party.
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Ms Yingluck arrived in Dubai after flying in a private jet via Singapore, sources said.

Her departure has prompted speculation in the Thai media that the military-run government facilitated her escape after cutting a deal with her family.

For two years the country’s 50-year-old first female prime minister had been closely monitored by security services, often complaining about invasions of her privacy.

Ms Yingluck would have become a martyr for her “Red Shirt” mass movement if she had been jailed over her handling of a subsidy scheme that benefited rice farmers.

The Bangkok Post reported on Sunday that it is believed Ms Yingluck received a “go” from those in power last week and was travelling on a foreign passport.

But Deputy Prime Minister and Defence Minister Prawit Wongsuwan??? told reporters security forces had not allowed her to flee and are checking possible escape routes.

Prime Minister Prayuth Chan-ocha, a former army general who led a coup that ousted Ms Yingluck’s government in 2014, also said he did not know where she was and the government was “looking for her”.

“If she’s not guilty she should stay and fight the case,” Mr Prayuth said.

“If she’s not here, what does that tell you? Will she still say she didn’t get justice?”

Analysts say Ms Yingluck’s failure to show up for the Supreme Court verdict on Friday marks the end of a decade-long era when the Shinawatra family’s mass movement dominated politics, winning the country’s past five general elections.

Ms Yingluck’s elder brother Thaksin Shinawatra, who founded and directed the movement, has a base in Dubai and homes in the UK where he regularly visits.

He fled Thailand to avoid a jail sentence on corruption charges in 2008.

Thai media is reporting that Ms Yingluck told a close aid to take care of her son Supasek Amornchat???, amid speculation he will join her in exile.

Ms Yingluck was last seen in public on Wednesday when she made merit and prayed at a Buddhist temple.

She last used social media on Thursday.

Leaders of Ms Yingluck’s Pheu Thai have met to try and avoid mass desertions by supporters upset that she did not stay and fight.

But Tida Thavornseth, an adviser to the Red-Shirt movement, said her departure will not hurt the party’s popularity.

“The people understand it well. The more they want to destroy the Shinawatra family, the more sympathy they garner,” she said.

Judges hearing the charges against Ms Yingluck have delayed delivering their verdict until September 27.

Her commerce minister was sentenced to 42 years’ jail on Friday in a case related to the rice subsidy scheme that caused billions of dollars in losses to Thailand.

This story Administrator ready to work first appeared on Nanjing Night Net.