Investor Insight: What Asian investors really think about Australia. 2

The average Australian property investor has a fairly good appreciation why the Australian property market is a good long-term proposition. From the perspective of our international investors, who balance their local priorities with that of their overseas opportunities, the decisions made are put into a different context. We interview C&L International Holdings to find out.

C&L - Interview - 0023 (1)C&L International Holdings, a China-based company, has recently undertaken its first Australian project, the luxurious $100 million Royal Como apartments, based in the cosmopolitan suburb of South Yarra, only 10 minutes by train from Melbourne’s CBD.

The Asian Executive interviews Ms. Echo He, Director of C&L International Holdings to gain insight into the strategic mind of a respected Chinese development company.

TAE:   Do you think that Melbourne lives up to its reputation as the world’s most liveable city?

Echo:   That reputation certainly forms part of our investment decision. Interestingly, Chinese have a philosophy about the union of man and nature where it is important that a man’s house exist in harmony with its surroundings. We see Melbourne as a city of great harmony, and something Melburnians should be proud. Our decision to build our project here is a statement of belief in what Melbourne represents. In our hometown of Zhongshan in China, we are also regarded as one of the most liveable cities in the world as rated by the United Nations. Our regular visits to Melbourne over time bring us comfort that we have made the right decision to invest here.

TAE: How have you found the experience working with Australian advisors and consultants in terms of their competence, work ethic and cultural differences compared to what you are accustomed to in Asia?

ECHO: Quite honestly, our C&L International team has experienced only minor cultural differences with our local Australian counterparts. Overall, we are pleased with the level of collaboration with Australians in Melbourne. The similarities that we share with both teams is the dedication, strong technical skills and experiences we bring to our Australian project. That collaboration is one of the important reasons why the cooperation between real estate practitioners of Australia and China has developed as rapidly as it has done in the past decade.

Of the minor differences we have observed is that our China consultants tend to be more reserved in their approach and offering opinions and will accept, as given, strong direction from their Chinese clients. Australian professional consultants are more prepared to express their opinions in a more forthright way. That is what I think is the major difference between our two consultancy teams.

TAE: What are your views on the economy and political climate of Australia in which to do business?

At a fundamental level, Australia is a country rich in resources, has advanced technology and is classified as a developed country. It has a strong and resilient economy as was seen by the Global Financial Crisis that engulfed the world several years ago. Australia was left largely untouched by that crisis that proves my point about its economic strength.

We have studied Australia’s pattern of GDP and, once again; Australia’s financial performance is strong. In 2013, GDP was 2.8% – growth that has been sustained for the past twenty years. In 2014 and despite the fall in iron ore exports, fourth quarter GDP was kept at a reasonable 2.5%. We have examined projections for the 2015 June quarter and GDP is expected to hold steady between 2% and 3%

Our review of Australia’s Consumer Price Index (CPI) also gave us confidence in our investment decision. According to the Australian government ‘s data, 2014 was a solid year with a CPI of 2.7%

Government data also showed to us how steady Australian property has performed over the past decade. The average rate of capital growth per annum has been between 10% to 12%. With increasing population mainly due to migration, rentals have risen to between 10% to 20% per annum.

We believe that Australia’s abundant resources, strong tourism assets, and strong population growth give us confidence in the Australia long-term economic future.

We believe that the regulatory system in Australia is very sound. The banking and legal systems are stable and orderly. The real estate system is well regulated and monitored closely by the government.

What we also appreciate about Australia is its immigration policies that help sustain its strong population growth.

TAE:   What is your view of the perceived slower pace of construction in Australia when comparing to similar projects in Asia?

Echo:   Our research informs us that project construction timetable for our Australian project is not slower than that of China. For our Royal Como project, for example, our Australian consultants advise us that the construction timetable is 18 months – which is what we would expect for a similar size project in China. The main difference between the two systems of project management is the time taken for the town planning application process. It takes much longer in Australia than China. Despite this, we respect the transparency in which the rules and regulations operate in Australia. This transparency and level of disclosure reduces project risk that is highly desirable for us.

TAE:   What are your future aspirations for Australian investment?

Echo:   We certainly intend to make further investments in Australia. We are happy working with the best project team in Melbourne and satisfied with the progress of our Royal Como project – our first in Australia. We believe that this quality project, with its emphasis on liveability, style and quality will help establish our brand in Australia. We want to go on and do other quality projects. Our Australian office is presently based in Sydney it is quite possible that we will relocate that office to Melbourne in the future.

TAE:   What is your anticipation of interest from both the local and international market? What marketing is done for the overseas market?

Echo:   For our Royal Como project, we anticipate that the ratio of local buyers to international buyers is 70% – 30%. Our expectation is that the local market already appreciates South Yarra, and that is where our purchasers are mainly going to be drawn from. Our overseas marketing campaign took us to Hong Kong and Singapore last March where we achieved strong sales.

TAE:   what key specifics attracted you to South Yarra?

Echo:   Yes, South Yarra is such a beautiful area. We are impressed with its distinctive blend of historical, cultural and cosmopolitan influences. The fusion of the old and new. We love the local interest in coffee, fashions and dining. Being close to the city and having excellent public transportation is a big advantage. There seems to be so much style and class in South Yarra, so it is hard not to be impressed by it.

TAE:   What type of buyer profile do you expect to attract to the project?

Echo:   Our market research tells us that business executives, high-net-worth individuals seeking quality, stylish accommodation in a superb environment will be attracted to our project. Similarly, our overseas investors will be those who have done their research carefully and have formed a view that we offer excellent value for money.