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Delan Cooper
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Delan Cooper is part of the crew at REAA (Real Estate Academy Australia) and writer. He loves to write an article about education and real estate. If you like his articles, don\'t forget to like and share it!

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Global Investment Strategy - Foreign Investment In Australian Real Estate

Feb 02, 2016 | 0 Comment(s)


Why Australian Real Estate is a Smart Global Investment Strategy
 
Australian Real Estate is a Smart Global Investment StrategyWith global stock markets in turmoil and several major corporations losing money, where will smart global investors put their money in the coming years? Australian real estate is quickly becoming one of the best investment options available. The following information discusses a few of the reasons Australian real estate is currently a great investment strategy, specific areas that are good options for investment, and some tips on the best strategies for investment.
 
Why Invest in Australia?
 
Economically, Australia is ranked number 4 in the world when it comes to economic freedom. The 2015 Index of Economic Freedom places Australia between number 3 ranked New Zealand and number 5 Switzerland. This ranking means Australia is 4th out of 42 nations in the entire Asia/Pacific region. This Index of Economic Freedom is based on several things including freedom from corruption, property rights, limited government, and regulatory efficiency. The rating system also takes into consideration open markets such as trade, investment, and financial freedom. Overall, these economic freedoms make Australia an attractive place for global investments.
 
Smart investors see that Australia's growth during the last 25 years has provided safe, low risk business opportunities. The Australian Trade Commission has shown that besides offering economic freedoms, Australia provides continued growth, significant innovations, and strong ties to Asia. Besides all the economic factors that make Australia a great place for investment it is also a place with a wide range of diversity in culture and landscape. It is home to incredible deserts, modern cities, and gorgeous beaches. 
 
Where is the Best Real Estate Investments in Australia?
 
Queensland, located in the northeast area of Australia, is also known as the Sunshine State. Many experts in the field of real estate believe that Queensland is a great area to invest in. According to the Deutsche Bank, Sydney home prices have on average rose above $900,000. This is up from under $700,000 just three years ago. Home costs in Brisbane have remained around $500,000 for longer than seven years. Because of this rise in home prices it is predicted that an influx of residents will be moving from areas like Sydney and Melbourne and heading toward the Queensland area.
 
One of the best and safest strategies for investment in Australia is in the housing market. Real estate for business, corporations, and other large land investments can be lucrative, but riskier and obviously more expensive. Many investors simply don't have the capital to invest in large projects. That doesn't mean there aren't several great investment opportunities in the housing industry to take part in. The Australian Bureau of Statistics have noted that both Sydney and Melbourne are expected to have large population growth through 2050. Everyone needs a place to live and current building has not yet caught up with projected needs. The Australian housing market provides something for investors of all levels. From purchasing one or two homes to developing entire subdivisions, a variety of investment strategies can be successful.
 
Who is Investing in Australian Real Estate?
 
Foreign investors from all over the globe are investing in Australian property. Large companies and organizations wanting to expand businesses to individual investors simply wanting to buy a vacation or retirement home are looking into the many properties available in Australia. China has recently been one of the biggest foreign investors in Australian real estate. The United States has remained in second place when it comes to foreign investment. Singapore, Canada, and Malaysia round out the top five. Many experts say that Australia is so popular for foreign investors because it's close to Asia while still providing a western style culture.
 
Investors know that the banking industry often shows favor to real estate and housing projects. Much of the banks' assets are currently held in residential property, either directly or indirectly. The banks, therefore, have a sound interest in maintaining a strong property market. Since property taxes are the biggest source of revenue for the local and state government, the government also has an interest in maintaining growth in the real estate industry as well.
 
What are Some Specific Areas in Australia that are Prime for Investment?
 
When investing in real estate it's often recommended to purchase properties with the most land. In general land appreciates while buildings depreciate unless they are being renovated and maintained on a regular basis. The suburbs in South and Western Australia are being touted as some of the best places to invest in real estate. In the southern part of Australia, Mansfield Park is one of the top suburbs for investing. An average home in this area costs about $375,000. In Western Australia, Maddington has been rated a top suburb to invest in.
 
Some of the other hotspots for real estate investment include the city of Brisbane in Queensland. Reports that northern suburbs have rising real estate sales. A few specific suburbs include Nundah, Zillmere, and Chermside. The Sunshine Coast is also considered a prime spot for real estate investment. With stunning beaches, beautiful nature reserves, and chic eateries, the Sunshine Coast has provided a gold mine of real estate investment opportunities. A few specific places include Noosa Heads, Twin Waters, and Tanawha. Finally, Kangaroo Island is also expected to be a great place for investment since they are expecting tourism to increase in this area. Check here for more information regarding Australia foreign investment opportunities.
 
What are Some Tips When Purchasing Australian Real Estate?
 
Property in Australia is normally sold on an "as is" basis. This means buyers should do their homework and find out as much about the property or structure as possible. Conducting a title search is the first place to begin. This can help a potential buyer find information such as mortgages, agreements with the government about the property, and any restrictions on use. There are also native title rights to consider. This means that indigenous people may still hold traditional interests and rights regarding water and land. This is normally not an issue in urban areas, but is something any prospective investor should look into. Finally, before making a deal in Australia for real estate it's important to decide exactly how the real estate will be acquired. There are several ways to do this. A few include a direct transfer, an acquisition of the shares from the owner, or a long term lease arrangement.
 
A foreigner buy property in Australia now will be investing for the long run. All indications point to Australian real estate being a smart global investment. Regardless of the future economic conditions, real estate tends to hold its value better than most other investments. Property, and in particular houses, have the advantage that value can be added to the investment. That added value is independent of market and economic forces. All this seems to be especially true in regards to investment properties in Australia.

 






Market Analysis - Australia
Time series for residential property
 
House price index, 8 capital cities
Price/Rent Ratio: 23 yrs

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