Overseas Commercial Real Estate Investors Actively Hunting Melbourne Market
Australia is known to host a large number of foreign investors. Investment in commercial real estate in Australia during 2018 hit as high as $43 billion, and of that, a record $17.3 billion came from overseas. Countries leading investment were the US and Canada, with Chinese investment slowed.
However, in the first half of this year, there was a surplus in Chinese Investment activity in Melbourne. Runjiang Investment Group, a Shijiazhuang-based developer from Hebei province in China’s north, recently purchased 509 St Kilda Road, Melbourne 3004 in a $163 million deal.
The low Australian dollar and lower interest rates continue to make Australia an ideal destination for commercial investment. Singaporean hospitality company Next Story Group has paid about $45 million for a newly built hotel in Melbourne’s Southbank that will be the launching pad for a new hotel brand.
In the Victoria state budget, the government said it would increase the surcharge for foreign buyers of residential property to 8 per cent from 7 per cent as it looked to offset the decline in property tax revenues due to the housing market slump.
Lord Mayor Sally Cap warned the government, saying that “new measures, on top of interventions by other market regulators both in Australia and overseas, could be seen to make it even tougher for foreign investors looking at opportunities in Melbourne.”
A survey from UBS evidence lab shows that Chinese buyers are increasingly sensitive to upfront stamp duty cost. If stamp duty or upfront costs are kept low (i.e. 5 per cent or less) UBS found that mainland Chinese buyers are relatively okay with this. However, as the rate moves higher, the proportion of customers who were previously willing to buy falls.
The survey quotes; “When upfront costs increase to 12 per cent and above, the current survey suggests a significant increase in potential purchasers (~20 per cent) would no longer buy the property.”
Source: UBS evidence lab
Xynergy Commercial concludes that raising the stamp duty rate in Victoria for foreign buyers would be detrimental to our economy, which relies heavily on this investment. At Xynergy Commercial, we always keep up to date with the latest news and events surrounding the property market in Melbourne and Australia.
It is ideal to speak with an expert to know your next step in Melbourne’s current real estate market. Feel free to claim your free no obligation property consultation with Xynergy Commercial to understand where your investment stands in the market at the moment.