Westfield Group’s plan to split its Australasian and international operations faces an increasingly uphill battle, as major investors in the domestically focused Australian real estate investment trust voice their unhappiness, according to The Australian.

UniSuper, which holds a 7.27 per cent stake in Westfield Retail Trust, has expressed concerns around the pricing and governance parts of the deal, and is one of a number of fund managers seeking to have the plans reworked or dropped altogether.

Under the plan, the Australia-focused REIT, Westfield Retail Trust, would be renamed Scentre Group and would buy Westfield Group's Australia and New Zealand management and development business on a price-to-earnings multiple some fund managers have estimated at around 20 times.

UniSuper's head of property and private markets, Kent Robbins, told the newspaper: “The strategy is good in terms of unifying the ownership of the domestic operating and management platform.” But that the cost of the plan for WRT shareholders and corporate governance concerns meant the deal “simply is just a bridge too far”.

Economist Saul Eslake has slammed Australian housing policy, saying government self-interest has led to the worst affordability problem in more than 50 years.

In a submission to the senate economics references committee on affordable housing titled “Australian Housing Policy: 50 Years of Failure”, the chief economist at Bank of America Merrill Lynch said that between 2001 and 2011, housing stock grew at a slower rate than the population for the first time since the end of World War II.

He blamed government policies, including cash grants to first home buyers and negative gearing, for inflating the demand for housing without increasing supply.

"Politics - more than any other single factor - means that Australians are likely to have to live with a dysfunctional housing system for a long time yet to come," he said in the submission.

Mr Eslake said in the submission that negative gearing "has actually exacerbated the mis-match between the demand for and the supply of housing, as well as having distorted the allocation of capital, and undermined the equity and integrity of the income tax system".

He also said the abolition of policies that "serve only to increase the prices of existing dwellings, such as cash grants to and stamp duty exemptions for first time
buyers, and ‘negative gearing’ for investors" would be one of a suite of reforms that could be implemented to "switch from policies which inflate the demand for housing to policies which boost the supply of housing."

Earlier, Antony Cahill, National Australia Bank’s executive general manager in charge of lending and deposits, outlined confidence house prices will continue to lift in 2014, according to The Australian Financial Review.

Mr Cahill said the sector, led by the largest market of Sydney, was performing “strongly” and we should see house price gains persist for a while yet.

“When you look at where we are in terms of values across the market place, affordability remains at good levels at this point in time,” he told the AFR. “We still believe there is room for house prices to grow.”

Mr Cahill pointed to low interest rates as a key to fuelling demand, while adding that Sydney could be in for more moderate growth this year given it outpaced most other markets last year.

Smaller lenders are challenging the big banks in the home loan market, tripling their share of fixed rate mortgages in 2013.

Less than one in five borrowers are opting for a fixed-rate loan but the popularity of this product is increasing amid forecasts of rising interest rates.

In this space, smaller banks - like Suncorp, ME, Bendigo and Adelaide, and Bank of Queensland - are eating away at the big players' share of the fixed rate mortgage market.

The non-bank and small bank share of the fixed rate market jumped from 13.6 per cent in February last year to 42.3 per cent in November, data from mortgage broker AFG shows.

The figures are however, volatile, with their share dropping to 38.2 per cent in December.

Still, AFG's general manager of sales and operations Mark Hewitt says home mortgage competition is at its healthiest level since the global financial crisis.

"The non-majors have been agile and focused on service delivery, targeting specific borrowers, and using very attractive fixed-rate deals to great effect," he said in a statement.

"While the loan books of major lenders ensure their continued dominance, it is great news for borrowers that they now have much wider choice."

The popularity of fixed rate home loans grew in November, from 16.6 per cent to 17.4 per cent, official housing finance figures show.

Some economists are expecting the Reserve Bank of Australia to raise interest rates in 2014, from a record low 2.5 per cent, as a weaker Australian dollar adds to inflationary pressures.

AAP

Confidence among builders spiked in the December quarter, a Master Builders Australia survey showed, The Australian Financial Review reports.

According to the newspaper, builders believe their businesses will be better in six months and most expect sales to rise while costs remain under control.

MBA chief economist Peter Jones said the survey supported his forecast for a lift in residential building, to almost 200,000 building starts in 2016, compared with 162,000 in 2012-13.

Non-residential builders were less optimistic but confidence improved in the most recent survey due to lower costs and easier finance, the AFR reports.

New ingredients are emerging that look set to generate a surplus of apartments in Sydney in two or three years – the first time that has happened for a long time.

The two new ingredients are the emergence of Chinese developers and a looming change of attitude by local councils and planning authorities.

Those buying Sydney apartments in the current strong market and those commenting on the 2014 buoyant forces need to be aware of the looming trend reversal.

And, although the forces are slightly different, a similar situation is emerging in Melbourne.

I reached the Sydney conclusion after a conversation with Sydney’s largest apartment builder and owner Harry Triguboff, who explained to me that he is seeing new trends in Sydney, which, if they continue, will cause of surplus of apartments. However given strong demand he does not expect the market to collapse but the new ingredients will clearly affect price levels. And Triguboff does not expect the emerging over supply of apartments in Sydney to affect rents.

To understand the power of the new forces we have to quickly document what has been causing the shortages.

On the supply side, councils and planning authorities made it very difficult to get planning and development approval on economic terms. This limited the supply and pushed up prices, so contributing to the high cost of dwellings in Sydney. At the same time banks were reluctant to lend to apartment property developers and to take into account pre-sold apartments bought by people residing on the Chinese mainland.

So while supply was constrained, in recent times, banks have been happy to fund buyers – particularly investors – whose ranks have been boosted by lower interest rates. At the same time Westpac have been big funders of Chinese buyers who are also assisted by their own banks. This classic planning/banking squeeze on supply and the boost in demand created by banks and interest rates contributed to the Sydney dwelling shortages and boosted prices effectively taking first home buyers out of many markets. Although he has been a long-time critic of the councils, planning authorities and banks, in fact Harry Triguboff has been a major beneficiary of these trends because he has had the capital to fund both the planning delays and construction of new developments.

But dramatic changes are ahead.

Triguboff says that while the local councils and planning people are still tough “the dam walls are cracking” as these groups and the NSW government realise the damage that has been done to dwelling affordability in Sydney.

The Chinese have been significant buyers of Sydney (and Melbourne) apartments for a long time but their buying intensity is increasing and the Chinese are also buying apartments in many other countries. There has always been a strong desire by wealthy Chinese to have assets abroad as a safeguard against what might happen in China. But overseas investment is now being encouraged and the jailing of leading politician Bo Xilai has intensified the desire of many Chinese to have assets overseas.

In Sydney and Melbourne not only are the Chinese buying apartments from Australian developers like Harry Triguboff’s Meriton, but Chinese developers are now entering the market. Unlike smaller Australian developers the Chinese do not need to use Australian banks and are using their own banks to fund the developments. Accordingly, funding is now plentiful and the two pillars of supply constraint are crumbling.

In Melbourne there is no developer of the power of Triguboff/Meriton. Most of the new developments have been concentrated around the Docklands and Southbank area where permission has been relatively easy to get. But in other areas of the city the Sydney-style supply constraints exist leading to too many apartments being concentrated in the one geographical area (Southbank/Docklands). This is also changing. And the Chinese developers are entering the Melbourne market with a vengeance, out bidding many locals for key sites. Like Sydney the supply blockages are breaking down.

For a long time in Brisbane the Chinese were not buyers in the market and so prices were restrained but that is now changing.

In Sydney and Melbourne the Chinese are not buyers of developments in outer areas like Sydney’s Northern beaches so apartments are much cheaper than in the city. But much more travel is usually required by residents.

Democracy is predicated on the idea that voters aren't silly – they make the right choices ... eventually.

And so it appears to be with the nation's understanding of debt. During the turbulent, acrimonious Gillard years, 'debt and deficit' became one of the three big sticks that Tony Abbott used to beat the Labor government – the others being 'carbon' and 'boats'.

The debt message cut through, while Labor's counter message – that we'd beaten virtually the entire world in keeping GDP growth on track, and inflation and unemployment contained – fell on deaf ears.

To the extent that citizens voted against Labor's 'appalling' debt position, they got it wrong.

As if to prove that point, Treasurer Hockey's first fiscal report, the mid-year economic and fiscal outlook, saw the Coalition borrowing even more heavily.

It took a few weeks of digesting that data before Hockey's motives became clear. The global debt environment is changing rapidly, and Hockey simply had to get away as much debt early on as he could (There's sense in Hockey's taper caper, December 20).

And the logic of that move is strengthened by the day. As Fairfax columnist Michael Pascoe pointed out yesterday, global investors would rather park their 10-year money in Italian and Spanish bonds than buy Aussie government securities. Ten-year rates are 3.82, 3.71 and 4.1 per cent respectively.

That's a bet against Casino Australia.

As the chart below shows, the best time to bulk up on cheap debt was during the last two years of the Gillard government. Treasurer Swan went in boots and all, and, as quickly as he could, Treasurer Hockey did the same thing.

Now, many voters who liked that 'debt-bad, Labor-bad' line, are now doing the same thing with their own finances. They are trying to bulk up on cheap debt while they can, to bet on the housing market.

In December, a third of housing loans written were at fixed rates, and the latest survey by mortgage broker AFG shows that non-major-bank lenders are gobbling up this business. Their share of the fixed-rate market has surged from 14 per cent to 38 per cent over the course of 2013.

Debt and deficit makes a lot of sense when you can lock in low, low rates. Hockey wanted his cheap money to cover the structural deficit until tax/spending reform can be achieved, and possibly to divert into much needed infrastructure.

Housing investors – who have chased first-home buyers out of the market – want their cheap money for a bet on continued strong growth in house prices. Home lending has hit a four-year high, and fixed-rate borrowers can get three-year money at a touch over 5 per cent (ING is offering 5.15, NAB 5.14 per cent).

They may get their wish, though there are worrying signs of falling rental yields on investment properties in many cities, and an ‘oversupply’ of apartments in some inner city markets, particularly Melbourne.

Are voters finally getting a sense of perspective in their views of debt and deficit? Joe Hockey will surely hope so – he needs them to vote for his amply indebted government in 2016.

Home owners in Australia, the UK, the US and Germany are set to enjoy 2014 according to last night's report from the global ratings agency Fitch. But there are global cracks appearing, which will become apparent in 2015 and beyond. And the forces behind some of those cracks will affect share markets.

Let’s start with the US. While Fitch expects a ‘modest’ rise in 2014 American house prices it expects lending volumes to decline in the US as mortgage rates rise and refinancing activity declines. In other words the 'taper' to reduce US money printing is going to affect the American housing industry in 2014, which in turn will affect consumer confidence. And that taper fear affected the US stock markets last night and is likely to be repeated again and again.

In Australia, Fitch also expects a "modest" rise in 2014 dwelling prices and if it is right about the rise being only modest then there will be little pressure to increase Australian interest rates unless the dollar declines sharply. Our housing price threat will come in two or three years if the supply of apartments in Sydney and Melbourne is boosted much faster than demand– as seems likely (Sydney's property dam is about to burst, January 21).

But behind these year to year variations there is a fundamental flaw in the level of dwelling prices in major cities. It is becoming harder and harder for people to afford living in their own houses in big cities like London, New York, San Francisco and Tokyo. And, of course, the same thing is happening in Australia. In 2014 affordability will decline further in the major cities although outside these cities prices rises are more modest.

While endorsing the major city trends, Fitch issues a warning: “We do not believe cities are immune from cyclical house price movements and their consequences. Longer-term average annual house price growth cannot excessively disconnect from incomes.”

There are many reasons why dwelling prices in the major cities are rising faster than both incomes and non-metropolitan areas but one of them is Chinese investment, which has not only been strong in Sydney and Melbourne but has also affected dwelling markets like New York and London.

Meanwhile Fitch expects the best 2014 house prices increases to take place in Germany and the UK due to low interest rates, sound GDP growth and improved credit availability. In Canada, house prices will be flat due to government measures to moderate the housing market. But further house price declines are expected in the Netherlands and Italy and larger falls are likely in Greece and Spain. Fitch is hopeful of some relief from house price declines in 2015 for these beleaguered countries.

What is the difference between visionary policy and social engineering when it comes to solving a housing shortage? 

Britain's coalition government is having trouble deciding, as it considers a plan to build new 'garden cities' to ease housing shortages in south-east England.

Controversy has erupted over a 'secret plan' supposedly being supressed by the Cameron government, which Liberal Democrat leader Nick Clegg wants released. 

He told fellow MPs late last week: "I believe in garden cities and that's why, as a government, we are committed to publishing a prospectus on them, which I very much hope we will do as soon as possible.” 

So a Liberal Democrat social-engineer (and deputy leader in the coalition government) is pressuring his conservative prime minister, David Cameron, to be visionary on solving the housing supply problem.

That's unlikely to go well. Britain's existing 'garden cities' and 'new towns' were developed in the early and mid 20th century to combine the benefits of country living with the services of the city. While they have mostly evolved into thriving communities, the best sites for new cities are populated by Tory voters – hence Mr Cameron's reluctance to talk about plonking a new city anywhere.

Back on this side of the world, in recent times it was the Gillard government that had most to say about shifting people out of capital cities and into new lives and homes in regional centres. In 2010 it set up a dedicated Department of Regional Development, headed by Simon Crean, and created around $10 billion of regional spending packages to help secure the support of independent MPs Rob Oakeshott and Tony Windsor.

Labor talked up the development of regional cities, offered cash incentives for job-seekers to move to the regions, tipped in money for housing infrastructure - backed by a 'roll-in' of the national broadband network to get the regions connected as speedily as possible - and even considered tying new centres together with high speed rail. 

Labor wanted cities such as Bendigo, Geelong and Newcastle to expand to take pressure off overburdened Melbourne and Sydney.

Smacks of leftie social engineering, right? 

Well not necessarily. In Britain, the nation's largest pension fund manager, Legal & General, has earmarked £5 billion ($A9.3 billion) to invest in building five new towns across the south east. 

L&G boss Nigel Wilson told The Telegraph: "If we can bring communities with us and agree planning, we'd like to help build several new towns across the country. We're already developing towns within cities, in partnership with enlightened local authorities and boroughs."

And this is where the charge of 'social engineering' starts to break down. House building in Australia is heavily regulated by local councils – that is, heavily 'socially engineered'. As Robert Gottliebsen explained yesterday (Sydney's property dam is about to burst), what Nigel Wilson would call 'enlightened' councils look set embrace greater numbers of apartment developments. 

That's the 'towns within cities' concept, and if that trend gathers pace in Australia it will go a long way to addressing the chronic affordability problem that has started to put first home-buyers off owning their own homes at all. 

But the other step, which is getting too little attention in Australia, is developing small regional centres into larger ones, or building stand alone 'towns' some distance from the perimeter of major cities rather than continuing the suburban sprawl – areas of our cities too often become isolated pockets of social disadvantage.

When there is massive pent-up demand for housing, a government that helps facilitate private funds to invest and create new 'towns' shouldn't be dismissed as engaging in 'social engineering'.  

Prime Minister Abbott has already expressed a desire to see government departments moved to regional centres – such as the NDIS being based in Geelong. And at present there's a stoush brewing over plans to shift 56 senior Department of Human Services jobs from Hobart back to Canberra.

While government jobs can help boost regional centres, it’s the private sector in some of the Abbott government's 'five pillars' that can sustain them – tourism, manufacturing innovation, agriculture exports, education and research and mining exports. 

Helping develop regional centres that show potential in those areas fits with the Abbott manifesto, including its plans to develop Northern Australia. And unlike David Cameron in the UK, Abbott doesn't face major political roadblocks – he might even be able to walk away in a few years’ time claiming the title of 'visionary'.

Ratings agency Fitch has flagged further housing affordability pressure as record low interest rates and below-average supply continue to fuel Australia’s booming property market in 2014, albeit at a slower pace than last year.

In its Global Housing and Mortgage Outlook report, Fitch predicted house prices would rise up to four per cent nationally over the coming year, compared to a 9.8 per cent rise in capital city house prices in the 12 months to December 2013.

The agency flagged increasing difficulty for first-home buyers entering the market as a result of the rising prices and the scrapping of the first home owner grant in South Australia as of January 1.

In September, first home buyers fell to a low of 12.5 per cent of all owner-occupied properties purchased.

Australia is the second most expensive major economy in which to buy a house, according to the report, lagging only the United Kingdom in terms of average house price to income ratio, at 8.3 times.

However, when comparing house prices to per capita GDP, Australia was the second most favourable nation.

The agency also said while dwelling prices nationally appeared expensive, affordability had actually “improved substantially” as a result of record low interest rates.

House prices grew 14.5 per cent in Sydney, 9.9 per cent in Perth, and 8.9 per cent in Melbourne in 2013.

Fitch expected growth in house prices in Brisbane and Adelaide – which saw comparatively subdued growth throughout 2013 – to also pick up 2014.

The agency said in addition to the Reserve Bank of Australia’s (RBA) prolonged rate-cutting cycle, changes to self-managed superannuation fund (SMSF) legislation allowing funds to more easily borrow against property, plus increased interest from overseas buyers, had helped drive prices up.

The nation’s corporate regulator has enhanced actions against mortgage brokers who use misleading information to secure loans, according to The Australian Financial Review.

The Australian Securities and Investments Commission is making the push in a bid to ward off fraud in the heated housing sector.

The watchdog is expected to announce today that it has barred two former brokers on account of using deceptive tactics to lock-in loans, with ASIC deputy chairman Peter Kell saying the financial crisis had contributed to a recent lift in misleading activity.

“They went through some very lean and tough years, and this creates risk for people to push the envelope when things warm up again,” Mr Kell told the AFR.

A new report suggests CBD offices across the country are struggling to be filled, with vacancy rates touching a 17-year high, according to The Australian Financial Review.

The research, by real estate firm Jones Lang LaSalle, indicates cost-cutting and hot desking are having an impact as the amount of empty office space climbed to 11.4 per cent of total supply for the first time since 1997.

Jones Lang LaSalle’s head of research and consulting, David Rees, said falling office vacancies was a global phenomenon and not isolated to Australia.

“It’s too simple to say its just the economy, different cities have specific factors but one of the effects of the global financial crisis is people are a lot more cautious,” he told the AFR. “They want to see their businesses growing before they go out and lease space and move in.”

The news comes after recent soft jobs data, which showed the number of full-time employees fell by over 30,000 in December.

Chinese groups are eyeing more Australian hotel purchases after Hong Kong-based Fu Wah International Group bought Melbourne's Park Hyatt hotel for more than $130 million, The Australian reports.

According to the newspaper, CBRE Hotels and CBRE China brokered the off-market deal.

Singapore's largest sovereign wealth fund, the Government Investment Corporation, sold the hotel and an adjoining carpark, after buying the property for $125.7 million in 20013, the newspaper reports.

Fu Wah, controlled by one of China's richest women and self-made billionaire, Chan Laiwa, is looking to diversify beyond its purchase into other Australian destinations, The Australian reports.

Westpac Banking Corporation has topped a global list of sustainable companies released during the World Economic Forum in Davos.

Other Australian companies in the Global 100 list include Australia and New Zealand Banking Group Ltd, at 19, the Commonwealth Bank of Australia at 25, Stockland Real Estate at 32 and Wesfarmers Ltd at 92.

Companies considered for the list are scored on energy, water, carbon and waste productivity, as well as safety performance and innovation capacity.

Criteria also include the percentage of tax paid, the ratio of average worker to chief executive officer pay, employee turnover, pension fund status and leadership diversity.

Westpac chief executive officer Gail Kelly, who is attending the forum at Davos, said social, environmental and economic responsibility was a key part of Westpac's culture.

"It [the ranking] is wonderful recognition of the work of our people to help create a sustainable future and deliver long-term value for our customers, employees, shareholders and the community," Ms Kelly said in a statement.

The family members of China’s political elite are stashing huge amounts of cash in offshore accounts, according to a two-year financial reporting project by the International Consortium of Journalists (ICIJ) released yesterday (Chinese leaders linked to secret offshore haven 22 January).

Among those implicated in the leak  are the brother in-law of president Xi Jinping, the son and son-in-law of former premier Wen Jiabao, a cousin of former president Hu Jintao and the son-in-law of China’s late “paramount leader” Deng Xiaoping. 

According to estimates reported by ICIJ, between US$1 trillion and US$4 trillion in untraced assets have left China since 2000.

Chairman Mao must be turning in his mausoleum.

As the West races to invest in China, Chinese princelings are racing in the opposite direction. It’s not just money that is leaving either, it's people too. A new report conducted by the Hurun Research Institute said that 64 per cent of China’s millionaires have either already emigrated with their wealth or are making plans to do so.

Nor is it just the mega-rich who are cashing in their chips. Research produced by Hong Kong-based brokerage CLSA shows that 15 per cent of middle class Chinese were looking to emigrate. According to CLSA’s Aaron Fischer, the desire to get out of the country rises dramatically the richer people become.

“As income levels rise to above 120,000 RMB per year, 45 per cent of people said that they’re looking to emigrate – which is a very high number ” he said in a briefing this week.

And where do the newly rich Chinese want to go? In the top spot is Canada, with Australia not far behind. A report released this week by the Center for China & Globalization (CCG) on Chinese migration trends revealed that the number of emigrants from China to the United States, Canada, Australia and New Zealand, reached 148,034 in 2012. Thanks to significant investor-visa programmes, as they leave the country they’re taking their money with them. In 2012, 6,124 Chinese people moved to the US by investing there.

As Bob Gottliebsen points out, wealthy Chinese have long sought to have assets abroad as an insurance policy in case things go belly up on the mainland (Sydney's property dam is about to burst 21 January). Yesterday’s leak shows how even those at the very pinnacle of power in China lack faith in the durability of China’s economic and political system.

One positive take away from all this is that we probably don’t have to worry about the flow of Chinese tourists petering out. Newly released data from the Australian Bureau of Statistics showed that Chinese tourist arrivals were down in November compared to the previous year. It’s likely that this was just a blip in a narrative of otherwise explosive growth. And as long as China’s rich intend on emigrating, they’re going to try before they buy.

CLSA predicts Chinese outbound tourist numbers will reach 200 million by 2020 and their overall spend will triple (Outbound Chinese tourists to reach 200 million by 2020: CLSA 21 January). This follows a Boston Consulting Group (BCG) report that says the number of Chinese travelers to Australia and New Zealand will soar from 910,000 trips in 2012 to 2.2 million in just 6 years (Chinese visitors set to soar: BCG 11 December).

This will result in, as the report puts it, the equivalent of a “resources boom” for the tourism and hospitality industries.

Sure, an influx of wealthy Chinese will likely further push up house prices but it will also ensure Australia remains a dream holiday destination for China's newly rich, as they tend to follow in the footsteps of other wealthy pioneers.

In this respect Australia is really punching above its weight. Just last week we knocked France out of the top slot for "Best International Luxury Destination" in the 2014 Hurun Report Chinese Luxury Consumer Survey. Australia is 10^th on the list of countries Chinese people would go to if money were no object according to CLSA.

This is only the beginning of the story. CLSA’s research indicates that when China’s neighbours hit a per capita GDP of US$8,000 dollars, outbound tourism numbers jumped up exponentially.  At the moment, only 10 Chinese provinces are at this point. In six years time it will be 27 provinces.

As with the resources boom, the reality is we probably don’t have to do much to continue to enjoy the benefits of China’s booming outbound-tourism market. The drivers behind the boom are not going away any time soon. Incomes are still going to go up. China’s heavily polluted environment is likely to get worse before it gets better. And with a miserably low amount of annual leave – most people in China are only entitled to five days off– it’s to Australia’s advantage that we’re the shortest long-haul flight out of there.

If China’s economy continues to grow, they will come. And if things go wrong, they will still come. Australia is likely to remain a highly desirable destination for a very long time.  

We really are the lucky country.

Goldman Sachs and Morgan Stanley have been two of the investment banks named as among those sounding out brokers yesterday about the likely level of interest in Goodman Group shares in the event of a block trade of the $800 million stake in the property company owned by the China Investment Corporation.

A sale of the 9.8 per cent stake has been the subject of chatter this week among real estate analysts and fund managers, but before any deal is done, banks are sounding out the likely level of institutional demand so that they are not left with the stock.

Last night, Goodman shares closed 16 cents lower to $4.75.

With 168 million shares to offload, it is likely that the banks would have wanted indications from about four or five brokers that they would at least be able to sell down $100 million, with each taking about $20 million, before they pitched to CIC.

Goldman Sachs fully underwrote the last selldown by CIC in December 2012.

The Chinese offloaded a 6.9 per cent stake for about $520 million after the sovereign wealth fund first bought into the listed Australian industrial property giant in 2009.

At the time, CIC committed to holding the remaining interest for a further 12 months for tax implications.

CIC bought its cornerstone stake in Goodman Group for 40 cents a share in August 2009 via an institutional placement.

It is also an investor in Goodman's unlisted Goodman Australia Industrial Fund.

A global industrial property giant, Goodman controls about $20 billion worth of industrial property globally.

Chinese investment in commercial property in Australia is tipped to grow by at least 30 per cent this year after more than tripling to US$700 million in 2013, as Beijing’s biggest insurance companies prepare to make debut investments in the sector.

Sales figures from Jones Lang LaSalle show China’s outbound investment in commercial property in Australia grew from US$209 million in 2012 to US$700 million last year.

Jones Lang LaSalle head of international capital Alistair Meadows said the rate of growth was likely to continue in the current year, particularly given increasing interest from institutional investors such as Chinese insurance companies. 

“Australia will remain a market of choice, this is not a cyclical change, it is structural and the momentum will continue,” Meadows said.

China’s global spend in the sector is tipped to pass US$10 billion this year, after hitting US$7.6 billion, last year, well up on the US$3.3bn invested in 2012. 

The office sector dominated transactions, accounting for 85 per cent of global deals but there was growing interest in in retail and hotels, as well as residential land development.

Andrew Ballantyne, who is Jones Lang LaSalle’s head of capital markets research, says investors included sovereign wealth funds like China Investment Corporation, high net worth individuals, as well as private and listed developers.

Chinese insurance companies have been running due diligence on the Australia market for the past year to decide whether the regulatory and legal environment lends itself to investing. If they take the plunge, they are likely to start buying up office and hotel assets this year.

“If they decide to invest, we will see significantly greater capital over the next five to seven years,” he said.

The move would be part of a play to diversify their investment sectors and investment geographies.  

The state-owned insurers would be competing with Korean insurance firms, Singaporean REITS and pension funds out of North America, Ballantyne said.

Sydney attracted the fourth-largest sum of Chinese money into commercial real estate, of $423 million, after New York ($2.9 billion), London ($2.1 billion) and Singapore ($953 million).

Of China’s US$7.6 billion global investment, US$2.3 billion went to the UK, (up from US1.3 billion in 2012) and the US with US3.1 billion (up from US$264 million in 2012).

Meadows said the initial catalyst for the dramatic rise in outbound investment was Beijing’s introduction of the ‘Go Global’ policy by the Chinese government.

“As a consequence, insurance groups, developers, and ultra-high net worth individuals have increasingly sought to diversify their real estate portfolios internationally in the last 12-18 months,” he said.

Chinese investors preferred large assets in established, transparent and liquid markets like New York and London. It was largely only Chinese development companies that were interested in development plays, with established assets seen as a safer bet.

Confidence in the UK housing market is growing, assisted by government-backed initiatives such as the Help to Buy scheme, according to newly published research.

The scheme is particularly popular with young people, the study found.

The YouGov research for property services group Countrywide found that 51 per cent of homeowners think the value of their home will increase in 12 months' time, an increase of 17 per cent from the last such survey, in November 2012.

More than half of 18- to 24-year-olds believe they are likely to use the Help to Buy scheme compared to around a quarter of those aged between 25 and 54.

Around a third of private renters think they are likely to use it to buy a property in the next three years, around double the 16 per cent of homeowners who are considering it.

The study found that location is the most important factor when buying a property.

Some 36 per cent of people buying a property within the next three years would be least likely to compromise on location. This rises to 47 per cent among 35 to 44-year-olds compared with just 26 per cent of 18 to 24-year-olds.

Just under one in five of British adults are currently prevented from buying a property or moving home because they are unable to afford a deposit, a decrease of five per cent from the results in November 2012.

Grenville Turner, chief executive of Countrywide, said: "The survey findings reaffirm what our property experts view on a daily basis when dealing with many people looking to move home. There are signs of a rebalance in the housing market as recovery in housing volumes gathers momentum.

"Greater availability of higher loan-to-value mortgages, improving economic conditions, lower unemployment and the implementation of Government-backed schemes such as Help to Buy, have given consumers reasons to feel confident.

AAP

Private-equity owned hotels operator Mantra Group is set to embark on a roadshow in Asia and Australia next week ahead of a $500 million initial public offering, The Australian Financial Review reported.

According to the newspaper, Mantra, owned by CVC Capital Partners and investment bank UBS, will tell investors it is the second-largest accommodation operator in Australia, with its brands Mantra, Peppers and Breakfree.

Mantra would be the first listed major hotel owner, the report said.

Property company GPT Group Ltd has flagged a lift in full-year earnings for 2013.

The owner of office towers, shopping centres and business parks expects its realised operating income for the full year to December 31 to be $471.8 million, up from $456.4 million in 2012, GPT said.

Realised operating income per ordinary security is expected to be 25.7 cents, while earnings per share growth is expected to be 6.1 per cent.

Chief executive Michael Cameron said the company was releasing earnings information to allow it to reactivate its on-market share buyback scheme ahead of the release of its full-year results on February 13.

AAP

Dexus Property Group and the Canada Pension Plan Investment Board last night declared that their $3 billion takeover bid for the Commonwealth Property Office Fund was unconditional and urged unit holders in the target trust to accept.

Dexus wants to get to 90 per cent of its target and take it private, so it can carve up its $4 billion of office towers around Australia. It also extended its offer by a week until February 14. That should give the group time to consider strategies for its enlarged portfolio.

There is talk that Dexus will use its wholesale property fund to make a major push into the retail space, where it controls about $3 billion of assets.