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FIRB fees fail to deter Chinese property buyers
Brief:Higher federal government fees and tougher penalties rules on foreign investments failed to deter Chinese buyers in property.
Higher federal government fees and tougher penalties for breaches of foreign investment rules that started December 1 have not deterred foreign investors in the property market.
 
If deals were completed before Tuesday, foreign buyers would not have to fork out the new foreign investment application fee of $5,000 for a home under $1 million or $10,000 for homes over $1 million as mandated by the Foreign Investment Review Board. 
 
"We don't think there will be a slowdown in the market because of FIRB, if anything, it should give buyers more confidence in the Australian market," said Esther Yong, the director of a Chinese property website.
 
"The Chinese thinks this way, "If I need to pay for it, it must be good".
 
The biggest foreign property buyers are the Chinese followed by a distant second, the US, according to the FIRB. 
 
TEMPORARY RUSH
 
Ms Yong did report a temporary rush on property contract settlements as Chinese clients tried to beat the Tuesday deadline.
 
"We've been getting calls and wechat social media messages every 15 minutes from China agents...as they were really trying to use the December 1 strategy to close deals," she said. 
 
But the rush was only temporary.
 
"Those who were ready, the new fees motivated them to buy. For others who are still looking $5,000 or $10,000 is not a huge impact. Some China-based agents are also happy to share the cost with buyers to sweeten the deal," Ms Yong said.
 
Local Chinese property investor Justin Wang agreed saying the new rules were created to help the Australian public feel "more comfortable" with foreign buyers. 
 
Aside from the comparatively small fees - the Chinese spend millions on property investments - they are still attracted to strong yielding property assets in Australia. 
 
"There's still an under supply and that means vacancy rates are still high," Mr Wang said. 
 
'$10,000 FEE WON'T STOP AN INVESTMENT'
 
Sweating over $5,000 to $10,000 is also incongruent with the Chinese long-term approach to investments in Australia, Ms Yong clarified. 
 
"The Chinese who decide to invest in Australia usually have more reasons then just pure investment. They want to live here, provide education for kids or to move closer to other family, so FIRB charges will not turn them away."
 
New Dalian Wanda managing director in Australia, David Zhai said his experience in China suggested restrictions usually do not have a long term impact on a free property market. 
 
"In the last 20 to 30 years, even though the boom in real estate China has been adjusted so many times by the Chinese government, it's still very hot," he said.
 
"The higher fees are just an adjustment to make sure the market does not surge too high." 
 
Dalian Wanda, led by one of China's richest men, Wang Jianlin, has $2 billion in residential and hotel developments in Australia - the 512-apartment Jewel project on the Gold Coast and the mixed-use and hotel complex in Sydney's Circular Quay. 
 
FIRB fees are just like higher peak-hour morning toll for the Sydney Harbour Bridge, another Chinese developer Michael Guo said. 
 
"It hasn't worked to stop people from driving at peak hour. We are still sitting in traffic."
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