Throwing Overseas Buyers Into The Mix
by Grant Warnes_Senior Property Investment Adviser
The demand for medium to high density residential accommodation within the inner urban areas of Australia’s major metropolises (Melbourne, Sydney and Brisbane) continues to be strong. Across Melbourne, for example, vacancy rates remain at 1.4 per cent and the rental market continues to be tight, with an increasing number of people competing to be closer to ‘the action’. Is this demand coming from local purchasers, or from overseas?
Previous policy
Previously, with any new dwellings within Australia, the Foreign Investment Review Board (FIRB) stipulated that up to 50 per cent of purchasers could be from overseas – ‘foreign persons’.
A Foreign Person is defined as either:
- A person not ordinarily resident in Australia, and includes those persons with temporary residence. It excludes Australian citizens residing abroad, as well as holders of Australian permanent resident status.
- A corporation or trustee of a trust estate where a foreign person, either alone or together with any associate(s), is entitled to hold a beneficial interest of 15 per cent or more, or two or more foreign persons hold an aggregate beneficial interest of 40 per cent or more.
New legislation
There are no restrictions on the number of dwellings in a new development which may be sold to foreign persons, provided the developer markets the dwellings locally as well as overseas. In other words, the dwellings cannot be marketed exclusively overseas.
It’s fairly standard practice for developers to market their projects for investment or purchase both here and abroad. There have been many successful examples of overwhelming offshore interest shown in newly constructed developments within the most popular inner urban areas of Melbourne, Sydney and Brisbane.
The purpose of this article is not to go into detail about how developers promote their projects, but rather to highlight the impact of further competition from abroad in the wake of the FIRB relaxing the 50 per cent requirement I mentioned above. More overseas purchasers are now likely to invest in specific developments because of this situation.
Looking at Melbourne alone, it will be very interesting to see what effect the FIRB ruling will have on the present chronic undersupply, in addition to the fact that 1700 new people are landing in Melbourne every week.
At the John Hopkins Group, we can take the stress and, to a degree, the competition, out of purchasing property. We work from a set of stringent property rules, derived from years of experience and research, from our understanding of the global history of quality property, and from our observation of the superior performance of thousands of properties purchased by our clients.
This rigorous, tried-and-tested criterion enables us to identify premium property which will always provide high returns, security and flexiblity.
Such recommendations are obviously keenly sought by many of the country’s top property developers. This means we, and therefore you, often receive privileged access to the best performing properties.
For more information, or to arrange an appointment with a John Hopkins Property Adviser, please contact our Client Liaison Officer on 1300 726 082 or click here.