Foreign Investment in Australia Property at Record High

Foreign Investment in Australia Property at Record High

1 year ago 0 747
FIRB-approved_foreign_invstmt_2015-16. Source-UBS

Source: UBS

 

 Approvals for foreign investment in Australian property hit a record high of  A$61bn, an increase of 75% in the 2014-15 financial year, possibly accounting for approximately a quarter of new developments Down Under.

This increase is on the back of a 102% spike on the year before.

The Foreign Investment Review Board (FIRB) records 36,841 (60% more than FYE 2013-14) applications by non-citizens and non-permanent residents to buy residential properties, representing 81% of total value of residential building approvals in 2014-15.

According to UBS economists, 75% of these new properties are located in NSW and Victoria, with data strongly suggesting that most were concentrated in the inner-city high-rise markets of Melbourne, Sydney and Brisbane.

“From these approvals, it is estimated that roughly about 1 in 3 convert into actual investment which means foreign investment accounts for about 25% of the new developments in Australia. The highest proportion of real estate investments by foreigners into Australia comes from China while Singaporeans and Malaysians have also been identified as some of the top investors in Australian residential real estate,” said CSI Properties  (Cornerstone International) spokesperson Virata Thaivasigamony.

“Australia’s popularity amongst investors is not unfounded due to its sound economy and policies. However, investors should study the markets well and find out which states and sectors general investment monies are going into before putting money down on property for investment. We place a lot of emphasis on research and we cannot stress more how important knowing the market is.”

Newsflash: Victoria Doubles Foreign Buyer Stamp Duty

“Victoria’s surcharge on foreign owners of residential real estate has been in effect since July 2015, but it has had little impact on foreign demand. Similarly, we don’t see a significant impact with this new surcharge increase, but we are bracing ourselves for a surge in demand over the next two months as investors rush to save on the surcharge hike,” said Virata.

With the increase in foreign investment in property in Victoria, the government is taking action to ensure foreign buyers of residential real estate contribute their fair share to the liveability of the state.

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To this end, the Australian government is increasing stamp duty surcharge on foreign buyers of residential property from 3% to 7%, applicable to contracts signed on or after 1 July 2016.

Additionally, land tax surcharge on absentee owners will also rise from 0.5% to 1.5% from the 2017 land tax year.

“Australia is headed for an election and one of the biggest challenges the government faces is the complaint from voters that foreigners are buying and pushing up prices; this could be a form of appeasement.

“Victoria’s surcharge on foreign owners of residential real estate has been in effect since July 2015, but it has had little impact on foreign demand. Similarly, we don’t see a significant impact with this new surcharge increase, but we are bracing ourselves for a surge in demand over the next two months as investors rush to save on the surcharge hike,” said Virata.

CSI Properties  (Cornerstone International) proudly markets international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: Cornerstone International does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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