Chinese food investment to grow
Agribusiness accounted for just one per cent of $9.46 billion of Chinese investment in Australia last year, according to a new study by KPMG Australia and the University of Sydney.
The study showed a handful of small to medium-sized investments in agriculture totalling $140 million, with only a fraction involving WA farm and food assets.
Nearly 50 per cent of all investment was in commercial real estate as Chinese transactions in the sector quadrupled in 12 months to $4.37 billion.
The study, Demystifying Chinese Investment in Australia, said there were no landmark deals in agribusiness despite strong interest and high demand for premium safe food.
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It said barriers to investment in farms and food production included profitability concerns, a lack of suitable targets, media scrutiny and political attention.
However, the China-Australia free trade agreement and a deeper understanding of the sector were expected to create a spike in investment.
“We expect some large scale investments in beef cattle and agriculture food companies, particularly those which are large in size and have experienced management teams,” the study said. “Chinese investors have spent some years learning about the sector and establishing contacts in Australia, including with advisers, enabling them to progress to a more mature investment stage.”
Chinese investment across all sectors was down 9.1 per cent and the value of deals involving China’s private sector outstripped state-owned enterprises for the first time.
The figures included four deals valued at more than $850 million. Two were in infrastructure and one in the leisure industry as Chinese investors looked beyond the traditionally dominant resources sector.
“The trend towards real estate, leisure, advanced technologies, food and services works in Australia’s favour for the longer term,” KPMG executive Doug Ferguson said.
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