Overseas interest in Australia real estate remains, but market starting to shift

Australian real estate investment for overseas buyers
The suburbs of major cities, such as Sydney, are now recommended for Australian real estate investment

Real estate investors from Asia are targeting Australia even with stamp duties on overseas buyers in the states of Victoria and New South Wales taking some lustre off the market. There are still plenty of Australian real estate investment opportunities for international buyers, but the trends are changing.

Chinese investors remain the dominate force in the Australian real estate market, but buyers from around Southeast Asia are starting to warm up to residential property Down Under.

“The majority of enquiries are still coming from China, however, there has been a drop in buyers which can be attributed to the increase in stamp duties which are imposed on a State-based level,” Ashley Koenig, CEO at National Property Buyers, explained. “In the past, investors have focused on major office investments, however, they now prefer residential construction, looking at medium density and greenfield developments.”

The bulk of interest National Property Buyers has seen is for Melbourne and Sydney properties. There has been a considerable increase of interest in Adelaide and Brisbane real estate since both cities offer lower median property prices and solid yields with capital growth potential.

“In all major cities of Australia there are certain types of properties that perform better than others in relation to capital growth and we are seeing that in areas like Melbourne and Brisbane where there is an oversupply of off-plan apartments,” Koenig said. “This can lead to a lower ‘On Completion Valuation’ that means the purchaser has to contribute more funds toward the settlement.”

Koenig noted that foreign buyers are now looking to move away from buying high-rise, off-plan apartments and are now looking for long-term capital growth opportunities.

According to National Property Buyers, these are desirable traits foreign investors should look for:

  • New build
  • Small developments with a maximum of 15 units
  • Suburban locations within 10 kilometres of major cities
  • Access to public transport
  • Close to major retail stores and supermarkets

The nuances of Australian real estate investment

Buying residential property in Australia is transparent, but investor should work with independent experts who understand the local laws. The first step is to visit the Foreign Investment Review Board (FIRB) website to see if approval to purchase property is required.

The country has different rules for those considering buying a brand new or existing property in Australia. In most cases, overseas investors are only allowed to acquire new or never lived in property. It is also vital to have finances in order before moving forward with a transaction.

“A problem we are noticing is that it is becoming increasingly difficult to obtain financing in Australia for foreign buyers so you must ensure you have access to funds for your purchase,” Koenig said. “We are also seeing a number of valuations for high-rise, off-plan apartments coming in below the purchase price so we recommend considering smaller projects which have less price volatility and a greater upside for capital growth.”

When considering an Australian real estate investment, it is also important to work with an agent who is experienced and knows the local markets. For example National Property Buyershas purchased more than AUD 500 million for its clients and has a network of trusted local service providers to ensure a smooth property buying experience.

“We live locally in the city you are looking to buy in and have a large network of selling agents. We will search for the property based on your requirements and budget and once you approve the property we negotiate the lowest possible price for you,” Koenig explained. “If you are an investor and require assistance with property management, we can also provide this service.”