With its trademark saffron dancing in the wind, the groundbreaking launch of the Wyndham Silkroad Ark Resort project near Komave village at the end of August this year marked one of the largest and most high-profile property developments ever carried out on Fijian soil. Since the beginning of the twenty-first century, Fiji has witnessed a massive influx of Chinese investors, a group who now constitute the fastest growing segment of global property buyers, and are the source of over two per cent of all Australian real estate purchases.
In addition to our ever-increasing rate of Chinese visitors, Fiji has also witnessed a significant rise in Chinese investment and trade, due to the development of significant bilateral economic relations. Figures provided by the Trade Ministry confirm that the cost of Fijian imports from China increased from $210 million in 2010 to $623 million in 2014, and the value of Fijian export sales to China surged from $5 million to $37 million in 2014.
With their market share estimated at 41 percent, Chinese investors claimed the majority of total investment projects in Fiji in 2015. A similar stake has been recorded for the first six months of 2016, with 45 percent of development projects registered with Investment Fiji having originated from China. The majority of these investments have been in the services and wholesale retail industries.
China is the Largest Source of Foreign Direct Investment in Fiji at Present
However, despite the increase of Chinese investments in Fiji in 2015, Minister of Industry, Trade, Tourism, Lands & Mineral Resources Faiyaz Koya noted that Chinese-implemented projects only represented 18 percent of the total value of current projects in Fiji.
Regardless, there has been an undeniable growth in the confidence of Chinese investors in the Fijian economy over the past few years. This has rendered China the largest source of foreign direct investment in Fiji at present, and business-savvy Chinese investors, amidst their rising affluence, have clearly set the pace of the international buying spree.
Efforts to further advance trade and investment growth between the two countries gave rise to the inaugural Fiji-China Business Exchange Summit and Trade & Investment Seminar in mid-2016. As outlined by the seminar’s Chinese delegation head, Chen Yushu, the interests of their 21 investors mainly centre around long-term investments in tourism, real estate, handicraft and furniture manufacturing, amongst others.
Exactly a year prior to the seminar, MOUs totalling some $690 million were signed for 21 Chinese investment properties, amongst which stand many high-profile hotel and resort projects, such as the China City Resort that is currently being developed on the Lomolomo beachside by the Peng Tao Real Estate Company.
Although it is inarguably a focal point of many such developers, this surge in Chinese investment is certainly not confined to Fiji. According to CBRE, the world’s largest commercial real estate services firm, Chinese investors put $16.1 billion into overseas real estate in the first half of 2016, which is more than double the amount recorded in the same period last year.
“Fiji has certainly seen an increase of Chinese investors, and the potential exists for more opportunities,” noted Arif Khan, principal of Bayshore Real Estate.
“There are several project investments, including hotel developments. We have also experienced that road contractors, such as China Railway, are looking at local investment opportunities after the completion of major projects such as the Nabouwalu Highway.”
Political Stability and Economic Growth Give Investors Confidence
Khan also notes that strong bilateral economic ties between Fiji and China have been an impetus for continued investment. The consistent growth of the Fijian economy continues to increase investor confidence, including business-savvy Chinese developers, who feel reassured by the increase in political stability and implementation of sophisticated government policies in what they perceive as the future hub of the Pacific.
“In certain areas, land prices are very attractive as well as affordable. The benefit to our economy is that idle land needs creative investors who are able to develop sustainable projects. However, landowners should consider equity stakes of up 20 percent in some of these projects, to create an ongoing cash flow.
“On the flip side, the Chinese investment has created a very competitive real-estate market. Some of the local investors will face stern competition, and some homebuyers will get priced out due to the competitive market environment. The Federal Reserve will be keeping tabs on the rising real-estate prices that have been spurred by low interest rates, high liquidity and foreign investment dollars.”
Forbes has attributed the increasing Chinese preference for overseas real estate to a widespread desire to diversify investments out of mainland China, and beyond draconian governmental restrictions. Office buildings, hotels, infrastructure, leased business, and other fixed assets are playing a prominent role in overseas investment portfolios, as well as representing a means to protect entrepreneurs from economic and political volatility in their domestic markets and core industries.
Fijian Real Estate Value Is Increasing
And with islands emerging as the new status symbol of wealthy Chinese, Fiji seems an obvious choice for such entrepreneurs. The Pacific region has been thoroughly explored in recent times for attractive offerings, having even captured the attention of the China Island Owners Association, whose members assembled for a lucrative tour of Fiji, Tuvalu and Tahiti in mid- 2015 to ‘shop around’ for islands.
For the majority of Chinese real estate buyers who flock to Fiji, though, the most sought-after properties remain sites for hotels, offices and investment units, in addition to the acquisition of residential homes.
“The drawback is that there is strong competition for locals in the move up market. For example, homes in Simla, Lautoka has seen an appreciation of well over 20% since the beginning of the year,” explained Khan.
Bayshore has noticed growing interest in hotel and integrated development sites in recent times, and anticipates major projects being initiated in places like Lomolomo beach, which lies between Nadi and Lautoka, in the near future.
“At present, the investments areas are Suva, Navua, Sigatoka, Nadi and Lautoka, to name a few…. there is significant investment in the North, with mining projects as well as other investments in Savusavu, while there are Chinese investors who have made formidable investment in farming as well.”
Indeed, the aforementioned Wyndham Silkroad Ark Hotel represents a $500 million investment; spread over 165 acres, with 360 guestrooms and 1000-seat convention centre. This project is commissioned by the Guangdong Silkroad Ark Investment Group, a large and highly lucrative firm whose portfolio also includes the Angel Star City in Suva, the South Pacific Commodities Trade Centre, and a photography base.
In the words of its general manager, Li Haolin, “Fiji has vast territory, a small population, pure environment and abundant resources, [and] is a wonderful place for immigration, vacation and studying abroad. With the booming development of tourism and the hotel industry, we, and our owners, have great confidence of the project. Fiji’s investment potential will have an enormous development and China’s enterprises that are going to be developed in Fiji, have vast prospects in front of them.” ∎
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