Sydney-based developer Ceerose said the dried-up foreign buyer market has left it with unsold apartments. Chinese buyers, including many local Chinese Australians with capital from mainland China, account for up to half of Ceerose's clientele.

"This year the market's hit the handbrake," Ceerose director Edward Doueihi said.

"It's really affected us. We've taken our developments off the market now. We've stopped marketing. We've stopped buying sites. In Sydney it's very negative."

Mr Doueihi said he had become a landlord, a role he had never traditionally played, and was renting 100 of his unsold apartments across Sydney's inner west, north shore and the CBD.

"We're holding a lot of stock," he said. "We just rent them out now. We can't move them."

A further complication was a simultaneous slowdown in both the rental and sales markets.

Mr Doueihi said the weaker rental market meant his average rent across one, two and three-bedroom apartments was $650 per week, about $50 less than a year ago. While his units were all occupied, it had taken an average six weeks to fill each one, rather than the three weeks that he said was normal.


"I've never seen markets in 32 years that the rental market's been affected and the residential sales have been affected," he said. "It's scary."

In the latest UBS Evidence Lab report on Chinese buyers, UBS says foreign buying peaked in 2016 and the numbers have continued to slow in 2018, suggesting foreign buyers, such as Chinese buyers, would no longer be "stepping up to provide an offset to slower domestic demand as credit conditions tighten".

Tighter conditions could eventuate with the risk of a "credit crunch" following the fallout from the banking royal commission.

Australia is no longer the main Asia-Pacific destination for retail Chinese investors in residential property, as these investors turn their attention to other buoyant markets like Thailand, Vietnam and even Japan, although the numbers in Japan are low, UBS adds.

"Our latest UBS Evidence Lab survey of 3403 mainland Chinese shows growing interest in Japan and south-east Asia, specifically Thailand, with our channel checks suggesting Vietnam is also on Chinese buyers' radar," UBS says.

International groups selling real estate to Chinese buyers, such as Juwai.com, corroborated these findings, saying south-east Asia has been gaining Chinese buyer market share faster than any other regions since early 2017.


The top countries are Thailand, Vietnam, Malaysia, Singapore and the Philippines because these countries are in the path of the wider Chinese 'One Belt, One Road' (OBOR) infrastructure plans.The OBOR initiative is a Chinese foreign policy and economic strategy to economically link Europe to China through countries across Eurasia and the Indian Ocean.

Smaller countries like Cambodia are also experiencing rapid growth in Chinese buying, although from a much smaller base.

"In 2016, only three south-east Asian countries made it into the top 15 for Chinese buyers, and none made it into the top five. Last year, five made it into the top 15. Thailand alone jumped from sixth place to third, bypassing Canada," Juwai.com chief executive Carrie Law said.

"The biggest drivers are the lower prices in these countries and the fact that they seem to have government blessing as Belt and Road Initiative countries. Capital controls are constraining the amount Chinese buyers can spend, so they have turned to lower-priced countries and lower-priced property even in high-cost countries like Australia."

Thailand is particularly attractive because visa applications are easy, flights from China are shorter and properties are easy to buy, international property site for Chinese buyers Sodichan and Australian Chinese property website ACProperty director Esther Yong says.

She says inquiries for properties in Thailand through her property portal have risen 30 per cent in the past year. Cambodia, too, has become popular with Chinese buyers.

The latest Foreign Investment Review Board figures confirm the decline in Chinese money from Australia with approvals of Chinese investment in Australian real estate in 2016-17 now half of the approvals in 2015-16.