Shanghai United Real Estate, a little-known Chinese property developer, is planning to invest more than A$1bn in Australia, shrugging off economists’ growing concerns about the emergence of a possible “housing bubble” in the main cities. 

 

The investments follow the group’s A$130m purchase last month of an InterContinental hotel in Double Bay, Sydney — a property that is famous as the location of the death of INXS singer, Michael Hutchence, in 1997.

 

Shanghai United is the latest in a flood of Chinese developers to enter the Australian market as they seek to diversify overseas, amid diminishing returns in their home market.

 

In his latest interview on Friday, Mr Xu said Australia was a key destination for Shanghai United’s investment because of its stable environment,levels and lower political risk when compared to other western markets.

 

Australia has become one of the most popular destinations in recent years for Chinese property developers, including Greenland, Wanda, Starryland and Country Garden. Canberra approved Chinese residential and commercial property investments worth a record A$31.9bn in 2015-16, an increase of almost a third on the previous year. This accounted for a quarter of all foreign property investment in Australia in that year

 

 

“Asian property developers have sprung up out of the woodwork in the last five years. They saw an undervalued market and very favourable buying conditions because of low interest rates, high incomes and favourable migration,” said Andrew Antonas, founder of Matrix Property Group, a real estate agency that markets development sites. 

 

But some local developers have warned the influx of Asian developers over the past five years has bid up the price of land in Sydney and Melbourne to unsustainable levels. This week Willem Buiter, Citigroup’s chief economist, warned that Australia was in the grip of a “spectacular housing bubble”, which needed to be tackled.Mr Xu said he was not concerned about the Sydney housing market. 

 

“It is not obvious that there is a bubble in central Sydney because there is actually a lot of demand from buyers. Sydney may be the most expensive city in Australia but prices compare favourably with other metropolitan cities, such as London or Shanghai,” he said.  

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