Foreigners Corner Rental Residential Market

by Bobby Castro⁽¹⁶⁰⁾ Red Star

Move Forward

According to a recent report by CB Richard Ellis Property Group, foreigners dominate the current Australian residential rental property market. The commercial real estate services company shows that overseas investors cornered thirty percent share of the Australia apartment market in many key cities of the continent.

The report counted that nearly 13,000 individual apartment units in thirty-seven housing projects all across Australia. The last time that foreigners dominated the market was in the late 1980's and early 1990's where the country experienced its last housing boom. Many of the investors back then were Japanese companies that invested in the development of office spaces Down Under. For this boom, the great majority are Singaporean investors as they account for 92 percent of the total number of apartments being built and developed. Other developers include investors from Hong Kong, Malaysia, mainland China and Korea.

According to Kevin Stanley, Executive Director for Global Research and Consulting for CBRE, "This follows closely the present flows of Asian capital into the Australian commercial property sector. Year to date, Asian buyers have been responsible for fifty one percent of all foreign investment into commercial property and nineteen percent of all transaction activity in this country."

Many foreign developers have made developments in a wide range of locations such as the Gold Coast, Brisbane, Perth and Adelaide aside from Melbourne and Sydney. The last two cities remain to be the top markets for investors and they account for nearly eighty percent of total demand for apartment rentals. Melbourne is the top choice followed by Sydney as to the number of apartments purchased by overseas investors.

There are many advantages why Melbourne was the top choice for investors, which are as follows:

1. Many Asian countries have had a long term connection with Melbourne especially through education and tourism;

2. Melbourne has a wider range of options as to sites and availability of units for rent;

3. The city has a good reputation regarding transactions in the property market and business;

Other overseas buyers are deeply interested in purchasing property in Australia. According to the numbers obtained by a major UK based search website, Rightmove Overseas, the number of searches increased by 114% in January. New Zealand also increased in the number of searches, up by 91%.

The major percentages in searches in Australia were South Australia which saw a 183% increase, Victoria with 138%, Western Australia with 114%, New South Wales up 92% and Queensland up 87%.

Bobby Castro is the online editor at the Australia Forum, where he has published a number of articles about housing in Australia and many other topics.

Article submitted Tuesday, January 17, 2012 & read 2 times.

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