Off-Shore Demands

Market Insights
8 years ago
3 minutes

The Australian property market has been thriving for decades now. And whilst local demand still dictates the market, foreign interest, especially for off-the-plan apartments, definitely counts for some numbers. 

Following the Australian Government's recent procedural investigation into foreign investment in the Australian property market, understanding why these investments are so appealing is seemingly key.

Importantly, whilst it isn't necessarily difficult for foreigners to invest in Australia, they do however have to abide by certain rules that have been set in place in order to protect Australian land, business and opportunity.

For those investing who reside outside Australia, the Australian Government must be contacted in order to obtain approval before they can take interest in buying property, vacant land, or buy shares and or units in an Australian urban development.

It is important to understand that there are two types of off-shore investors, those that buy, and those that invest. 

Tim Storey, Managing Director of Residential Projects Victoria at Colliers International, said that instead of it being seen as ‘foreign investments’ it should be portrayed as “off-shore demands”, as a lot of these international buyers are actually looking to move here, rather than to just invest.

“Those living in mainland China are the ones who have a huge desire to move here. It is seen as a foot-in-the-door to get into the Australian way of life - they acquire property here as an aspirational purpose, it is quite emotional for them”, he continued.

The influx of foreign investors, rather than settlers, is coming from Singapore and Malaysia, rather than China, Mr Storey said. “the bigger the property, the better - they are very interested in the luxurious, and the glamour.”

Leonard Teplin, Project Marketing Director of Marshall White, asserted a similar insight into foreign property investment.

“Culturally, they believe the properties within capital cities, ie Melbourne and Sydney, are the safest preference”, Teplin said, ”the bigger, and the more prestigious, the better."

"The asian market is more attracted to cultural landmarks and security, therefore, it seems, Melbourne’s CBD is the most appealing.” 

It is Melbourne, not Sydney, however that is dominating the Asian interest.

“The Asian market, who often buy for their family members, whether that be their sons and daughters, or for other family, want them to be close to the appropriate amenities - most commonly that is universities…”

"Within the CBD, we can see a huge influx of Asian influence, as the likes of Melbourne University, RMIT University and Victoria University, are all within close proximity. In comparison to Sydney, Melbourne is more attractive as the Higher Education facilities and institutions are more internationally recognised “, Teplin said.

Foreign investment in Australia has arguablly provided many cities not only a competiive real estate market but also strong economic reliabiilty and growth.