A real estate agent's sign outside a house shows that it has recently been sold in Sydney
A real estate agent's sign outside a house shows that it has recently been sold in Sydney October 13, 2014. Reuters/David Gray

New Zealand is set to witness a big wave of Chinese investments in its prime property markets. The targets include luxury homes to Auckland-wide retail, industrial and commercial buildings. As the Chinese floodgates open, there will be US$10.9 billion worth of new investment into New Zealand real estate. This was disclosed by Juwai.com, China's leading property portal. It said the jump in investment will be driven by Beijing's plan to ease restrictions on privately held capital.

The Chinese international property portal confirms that New Zealand is high on the radar of Chinese property investors and get 3.3 percent of the expected Chinese outbound property-specific investment. This is despite the recent Budget proposals in New Zealand seeking to tighten the foreign influx for New Zealand’s housing and property. The Government was hoping that the steps will serve like an anti-dote to pre-empt property bubbles with curbs on non-residents trading in residential property, other than their main home. Steps like asking to provide a New Zealand bank account, IRD number and a tax identification number from their home country as well as passport were aimed at reckless buying and profit booking by speculators.

Top Cities

The Chinese portal says Auckland is the top NZ destination. Dunedin, Christchurch, Wellington and Taupo are also there among the favourites. The Juwai co-chief executive also exhorts New Zealanders to welcome the Chinese investment in their priced markets. According to Juwai, some 63 million Chinese already have sufficient wealth to purchase international property, which include 2.8 million high-net-worth individuals. Around 60 percent of these high-net-worth Chinese are active in overseas investment, immigration or education. For them, the key motivations for buying property overseas are children's education, wealth security and preparation for retirement. That trend will only grow, the portal said.

Australian Suburbs

Meanwhile, a study by KPMG and the University of Sydney’s China Studies Centre backed by Knight Frank showed that Chinese investors are now eyeing the city’s fringe suburbs as an untapped market and are convinced that they will get better returns than putting money in the inner city. Chinese investors transacted more than AU $10 billion worth of commercial and residential real estate in the first four months of 2015 and may spend more than $25 billion by year end on inner city properties of Sydney and Melbourne, reports Daily Telegraph.

Knight Frank analyst Dominic Ong said Chinese demand for inner city properties has led to short supply of properties and they are now constrained to look at opportunities in the outer suburbs of Melbourne, Gold Coast and regional NSW. In 2014, Chinese investment volumes in Melbourne and Sydney real estate outstripped that of London and New York, with Australia becoming the second largest recipient of total Chinese investments in overseas property investments.

(For feedback/comments, contact the writer at k.kumar@ibtimes.com.au)

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