In the mid-1970s Asian investment in Australia accounted for less than 15% of the total foreign investment inflow. By 1984 the inflow from Asia had increased dramatically to 40% or $A4155 million per annum. Over the past ten years an increasing proportion of the Asian investment inflow has been directed to the capital city property markets—particularly Sydney, Melbourne, Perth, Brisbane, and the Gold Coast. In this paper the reasons for these changes, and in particular the deregulation of the Australian finance sector and the underdeveloped conservative nature of Australian property markets, are analysed. It is argued that the changing nature of the capital city property markets is part of the process of integration into a world property market dominated by finance, corporate, and service linkages, and between the larger global cities, of which Sydney is one. Comparisons are made between the investment philosophies and behaviours of the Asian property investors active in Australia and those of their Australian and European counterparts. The paper focuses on the risk philosophies of the Asian investors and the degree to which they are providing a vital injection of funds for previously underdeveloped market opportunities. A critique is made of the existing Foreign Investment Review Board guidelines as they apply to equity investment by foreigners in Australian urban real estate. It is concluded that the guidelines have become an anachronism, and rather than protect the interest of Australia they have contributed to the growth in overseas indebtedness and are detrimental to sustained economic growth.
