The cash entering Australia from Chinese investors increased to about $US10 billion in 2014 and there are more deals tipped for the remainder of this year, agents say.
Sydney and Melbourne were the primary targets, according to a new CBRE ViewPoint, which says Australia has been batting above its weight in relation to Chinese capital flows to global real estate, which surged from US$1 billion in 2010 to $US10 billion in 2014.
UBS analysts say the target for Chinese cash remains Sydney because it's the preferred travel destination for tourists.
"This is positive for Scentre Group which has 20 per cent of its portfolio in close proximity to Sydney's central business district," UBS says.
The CBRE report says Australia attracted 15 per cent of this investment last year and more than one-quarter of the $US4 billion invested in the first quarter of calendar 2015, which the report said were extremely high weightings relative to the size of the local economy.
CBRE's head of research, Australia, Stephen McNabb, said capital flows from China to Australia were complemented by growing numbers of Chinese tourists, students, settlers and an increased bilateral trade relationship.
"Australia competes for capital with other markets globally, however the aforementioned factors appear to provide a longer-term underpinning for the capital flow now being experienced," Mr McNabb said.
The CBRE data shows that in the period from January 1, 2014, to March 31, 2015, Chinese direct investors were the second largest buyers of commercial property in Australia, after Singapore and ahead of the US.
Mr McNabb said Chinese investors accounted for one-third, or $3 billion, of the $9 billion in foreign capital invested in commercial property assets nationally, with that momentum continuing to build.
"Flows from China into global markets are expected to remain firm, with potential upside, as regulatory changes over the past three years have allowed a higher investment allocate into real estate for life insurers, rising from 10 per cent to 30 per cent, and offshore investment to a limit of 15 per cent across all asset classes," Mr McNabb said.
Some of the largest sales included $452 million for Gold Fields House at 1 Alfred Street, Circular Quay by Dalian Wanda and the Aoyuan buying at 130 Elizabeth Street.
Obsolete sites in the Melbourne CBD, such as the former Carlton & United Brewery, have also been bought with potential for conversion to residential use.
CBRE senior managing director, institutional investments, Rick Butler said the economics of residential development in some Australian cities, particularly Sydney and Melbourne, have improved, underpinning significant buyer interest in well located office assets suitable for residential use.
