RMIT researchers have identified a new category of Chinese property buyers, dubbed “residential tourists”, who turn regular tourist visits to Melbourne into home ownership.
“Residential Tourists” are among a new breed of cashed-up traveller who start out as occasional visitors to the city but return so often that they eventually buy homes and become semi-permanent residents.
The development mirrors the long-time practice in the UK where travellers begin making regular tourist trips to countries like Spain, fall in love with the lifestyle, then go on to buy residential property and call both nations home.
PhD researcher Peng Wong said while the trend had been evident in the northern hemisphere since the 1980s, it was only now beginning to emerge in the Asia-Pacific with the rise of the wealthy middle class in China.
As part of his research in the School of Property Construction and Project Management, Wong interviewed a range of stakeholders including investment and property experts from global real estate firms in Australia and China, about the new class of homebuyer and its significance for Melbourne’s residential property market.
His research is the first to examine in detail the motivations and aspirations of Chinese property buyers in Melbourne.
“This group had been frequent visitors to Australia and had bought a property here, but were not permanent residents in Australia,” Wong said.
“(But) they actually behave like they had migrated to Australia, because they visit so frequently and enjoy the lifestyle so much.
“This is a new phenomenon that is actually adding strength to the buying activities in the Australian residential property market.”
The number of Chinese born Australians has more than tripled to almost 450,000 in the past two decades.
Research by Credit Suisse predicts that Chinese investors and newly arrived migrants are expected to invest as much as $44 billion into the Australian residential real estate market over the next seven years.
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Sitting between traditional property investors and migrants who achieve permanent resident status, the investment behaviour of “Residential Tourists” in the Australian housing market can be broken down into two sub-categories, according to Peng.
The Upper Middle Class is attracted by Australia’s coveted lifestyle and educational opportunities for their children. They become a “Residential Tourist” by using their purchased property as a base to visit them frequently.
In many cases they eventually go on to become permanent residents themselves, retiring to live down under with their children after they have graduated from university.
High Net Worth Individuals are an affluent group who have turned tourism travel into a way of life. These travellers enjoy “fluid, leisure-based lifestyles” around the globe.
Peng said members of this group typically invest in the Australian property market as a way to diversify and preserve their wealth as part of a global property portfolio.
“They might also have friends and relatives who bought residential properties in Australia and kinship with similar culture background assists their decision to invest in Australia,” he said.
This group tend to adopt a “care free” attitude toward their investment, either renting out their property or engaging a regular caretaker to maintain the place during their absence.
However, the combination of buying property in Melbourne and their repeated exposure to the attractive lifestyle influenced the frequency of their visits, Peng said.
“The two groups – Upper Middle Class and High Net Worth Individuals – come from very different perspectives, but arrive at the same point and decide to stay.”
Peng was joined in Shanghai by his supervisor, Associate Professor David Higgins, who said it was the first time such research had been done into the mindset of Chinese property buyers in Melbourne.
“Most of the market commentary has talked about so many million dollars being invested in this or that country, but they haven’t really looked behind the screen and said, ‘what are the forces driving this’,” he said.
Peng said there are more than 10 million millionaires in China, members of a rapidly growing and affluent group who have money to travel as part of their lifestyle.
“Melbourne’s status as the World’s Most Liveable City is such terrific branding for Australia internationally,” he said.
“There are all these pull factors toward Australia as a tourist destination: a good place to stay, security, clean air, which is so important to Chinese nowadays because of the pollution in China.
“They come here and they like it. So as a result, they have the money to chase Melbourne property here.”
Story: Greg Thom