Why asian investors are flocking to the Australian property market

Posted by By at 20 June, at 11 : 27 AM Print



PI03_InvestorsOver the past few years, Australia’s property market has drawn in numerous investors from Asia. According to a report from Knight Frank, Asian investors currently represent over half of the total demand for Australian properties, a trend that isn’t likely to die out anytime soon.

The vast majority of foreign investors are Chinese, but property investors from Singapore, Indonesia and Malaysia have also increased their operations in the land Down Under. But why are Asian investors so attracted to Australia? What makes them so keen to invest in this country’s housing market? Here is an overview of the reasons why Asian investors are flocking the Australian property market.

Legal differences

There are numerous benefits provided by Australia’s housing system, one of them being higher returns. In part, these higher returns can be explained by the fact that anyone who is buying a property in Australia will receive interest on the land for an indefinite period of time. These interest benefits can be passed on to the buyer’s heir.

However, Asian markets are not so permissive. For example in China, the government only permits 99-year leases, which means that a property can’t be bought outright. Having said that, even though the Australian dollar has been going strong for the past few years with no signs of slowing down, Australia still remains a better option for property investment than most countries in Asia.

Market stability

Real Estate can be volatile, however, the Australian property market has been showing strong signs of growth that is expected to continue through 2014. Moreover, many consider property to be a safer bet than shares and stocks.

According to Aristid Armstrong at ESSA, Asian investors are not that happy with the stability of their local markets, which is why some of them have turned their attention to Australia; at least in part. Even though there are never really any guarantees in real estate, a stable market, is expected to draw in more investors.

Bargains

According to Kristie Kwok at Street News, the influx of Asian investors is partially due to price declines, in some Australian areas such as Gold Coast.

Unlike the previous Japanese boom registered by Australia nearly 3 decades ago, Chinese property investors are primarily interested in scooping up bargains that will generate high revenue…

 

Excerpted from an article originally published in issue 3 of Property Inc. magazine. 

 

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