BY MAK KUM SHI
makks@thestar.com.my
Australia’s firm fundamentals in its national economy, education, business transparency and global competitiveness makes the country an attractive destination for real estate investors.
Stable capital growth for property, quality education, and business transparency in Australia are driving factors that attract Malaysians to invest in Australian real estate. It is important to note that growth rates for property prices differ in various Australian cities.
SK Brothers Realty (M) Sdn Bhd general manager Chan Ai Cheng commented, “Based on the Australian properties that were launched in Malaysia several months ago, we found out that Malaysians still favour to purchase properties in the capital cities across Australia, namely Sydney, Melbourne, Brisbane and Perth.”
She cited three main reasons on why Malaysians choose to invest in Australia rather than the UK or the USA. The first reason is quality education. In Queensland, there are at least two universities, the University of Queensland and the Queensland University of Technology, that are ranked at the top 1% in the world.
The former university was recognised by Times Higher Education University Ranking 2011, while the latter’s business school was the first in Australia to achieve triple crown international accreditation (EQUIS, AACSB and AMBA), which is held by less than 1% of business schools in the world.
The second reason is the steady and stable capital growth for property in all capital cities across Australia. According to the data provided by the Australian Property Monitors, property prices for the capital city of Melbourne increased to almost 30% in just 15 months for the period between 2009 until 2013.
The third reason is business transparency where corruptions is at very low levels. According to Jones LaSalle’s Global Real Estate Transparency Index 2014, Australia is ranked third highest when it comes to providing a regulated and transparent investment market.
It is noteworthy that Australia is recognised as one of the most competitive countries in the world. According to the Global Competitiveness Report 2015-2016, Australia remains a strong performer across all categories in the report’s index, particularly in education and financial market development.
However, despite having world-class education and universities, it continues to lag behind most advanced economies in innovation. The report stated that the country must diversify further and move up the value chain, given that global commodity prices are set to remain low for the foreseeable future, along with the slowdown in China.
Based on data provided by Australia Bureau of Statistics between March and June 2015, Australia’s property boom focuses on two main and biggest capital cities, which are Sydney in New South Wales and Melbourne in Victoria.
The property price growth at a national level was recorded at 4.7%. However, the growth of property prices in Sydney within the same period however was at 8.9% or an 18.9% increase over the year. This was deemed the largest quarterly growth rate since 2002.
Melbourne came in second with a quarterly growth rate of 4.2% and a year-on-year rate of 7.8%. Brisbane grew 0.9% and Adelaide price rose to 0.5%. Perth and Darwin were the only two cities that posted price contractions for both the quarter and the year.
The National Australia Bank expects house price growth to accelerate modestly in Brisbane (5%) and Adelaide (0.5%) and remain flat in Perth. In contrast, prices are expected to moderate in Sydney (5%) and Melbourne (3.5%) in 2016. National house price growth is expected to moderate to 3.8% in 2016.
According to a discussion paper published by the University of New South Wales Australian School of Business, the market has shown steady growth rates of around 3% per annum since the 1970s. However, since the 1990s, prices have risen by around 6% per annum.
According to Knight Frank Global City 2016 report, Australia will have major infrastructure projects going on totalling USD380mil (RM1.649tril). Confirmed projects total USD90bil (RM390bil) from resource sector related projects to urban road and rail long-term improvement.
Offshore ownership increased on the commercial side, especially in Sydney, where the foreign ownership percentage of Central Business District (CBD) office assets increase from 16% to 30% of the market value, while offshore ownership of four and five-stars hotels increased from 69% to 88%.
Melbourne CBD is now the second largest grade A office market in Australia. It has grown by 28% over the last 10 years comprising 47.4 million sq ft of office space. The boom is due to the growth of white collar employment. There are over 60,000 new employees in a city of over 4 million people, the fastest rate when compared to other cities in Australia, four times more than the growth rate recorded in Sydney CBD and the combined growth of both Brisbane and Perth.
Chan concluded, “Factors affecting the property market in Australia include the current situation of the Australia economy and how the Reserve Bank of Australia will react and adjust to the currently low interest rate. On another note, the Australia’s consumer and business confidence continue to rise ever since the new Australia Prime Minister Malcolm Turnbull was elected, a stable government at both the Federal and the state levels are in place and this encourages job growth.”
>> Mak Kum Shi is the content and consumer engagement manager for the property business unit of Star Media Group.
