Australia has become an increasingly popular destination for foreign investors in recent years, as the country’s quality lifestyle, golden coast and rising property values attract buyers. Concern has arisen among some, though, that the wave of foreign investment is washing out domestic buyers and pushing up prices. Is it true? Where is money being invested? And who are these buyers anyway?
We present a guide to foreign investment in Australian real estate.
Where do Australia’s foreign investors come from?
China has now become the biggest source of approved foreign investment in Australia for the first time, according to the Foreign Investment Review Board. The country overtook the US (approved to spend $17.5 billion) with $27.7 billion of approved spending. $12.4m of that was approved to spend on real estate, double the amount spent by the Americans. Great Britain remains a big force in Australia’s property market: together, the UK and Japan have larger total investment volumes Down Under than China, according to the FIRB.
Why is Australian property appealing to international investors?
Australian property is popular due to a number of factors, which vary depending on the nationality of the investor. In Britain, Australia remains the number one destination for expats planning to move abroad, as well as those looking to retire in another country. According to the UK’s Office for National Statistics, 8,000 more Brits moved to Australia in 2014 than in 2012, due to both employment opportunities Down Under, as well as the cultural appeal of the country for those wishing to relocate.
For buyers in the UAE and Pacific region, Australia’s proximity makes it a convenient and familiar target overseas. China’s growing demand has been fuelled by its own economy: the country’s slumping market has driven a lot of Chinese investors to seek safe havens in other countries. With Australia nearby, offering a favourable exchange rate as well as strong capital growth, it has become a natural option for many.
Which areas are are international investors keeping their eye on?
Perth, Sydney and Melbourne are the most sought-after investment hotspots among international buyers. Perth accounts for one in three searches for Australian property on international portals, while Sydney accounts for three in 10 and Melbourne one in five.
Overall, though, Queensland is the most popular place to invest, making up almost half (47.9 per cent) of all enquiries for Australian property in the past 12 months. This is partly due to the number of listings on the site within the region, which, in turn, is fueled by development in the area, as non-resident buyers are only permitted to buy new build homes (see below).
Demand is also strong for property in Western Australia (31.48 per cent) and New South Wales (28 per cent).
The least popular parts of Australia among overseas investors are Tasmania, the Northern Territory, Canberra and South Australia.
For more information on which parts of Melbourne are best for buy-to-let investment, click here.
About the Author: Dan Johnson is the founder and owner of international property portal, TheMoveChannel.com. Dan has a wealth of experience in the property industry, having started his international property portal in 1999, and having personally invested in a wide range of both UK and Overseas property himself. Dan has worked in the industry for well over 20 years, helping give investors and property hunters the chance to not only find their dream home or investment property, but to understand how the industry works and to cut through the jargon.