The popularity of Australia’s lifestyle and the country’s economic safety continue to attract international investors in 2018.
Despite the introduction of higher foreign ownership taxes and tighter lending restrictions in 2017, recent record sales and an influx of potential buyers to the country following Chinese New Year are positive signs that international buyers are still keen on Australia, according to agents.
Chinese property website Juwai.com lists Australia as the second favorite offshore investment destination for Chinese buyers, behind the United States. Meanwhile Melbourne continues to be their favorite Australian city, according to searches conducted on residential website www.realestate.com.au.
Prospective international buyers were inspecting property in the days following Chinese New Year, as they celebrated the holiday week with their families, said Jamie Mi, head of the international division for Melbourne real estate agency Kay & Burton.
Ms. Mi said it was a particularly busy time as foreign buyers looked for property with quality high-end finishes in close proximity to private schools and universities, in prestigious historic suburbs.
"The influx of older [established] families is uncountable," she said. "In the last five years they were looking at the top end, but weren’t ready to buy."
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But "this year most of them are ready to buy and are very seriously looking," she said.
Scarcity of quality property available at the top end of the market is believed to be driving some highly priced transactions, including the A$52.5 million (US$40.7 million) February sale of the historic Stonington Mansion to a Chinese buyer.
The property on Glenferrie Road in Malvern, eight kilometers from Melbourne’s central business district, set a price record, eclipsing the state’s previous record level of almost A$40 million (US$31 million).
Foreign buyers, who spend an estimated A$6 billion (US$4.7 billion) on Australian residential real estate each year, according to research firm Credit Suisse, are predominantly from Asian countries. Residents of New Zealand are the second biggest investors.
While interest in Australian property by foreigners, especially Chinese buyers, is down 18% in the year to February, due to an increase in a number of taxes, tighter lending restrictions and a slowing property market that all occurred in 2017, REA chief economist Nerida Conisbee said international house hunters continued to be attracted to the dream of Australian home ownership.
More:Despite Slowing Market Overall, Australia Saw Eye-Popping Real Estate Deals in 2017
Motivation for buying has also changed, according to research conducted by Investorist, an off-the-plan property website.
Investorist’s China 2017 International Property Outlook report showed that while asset protection and wealth creation used to be the number one reason for investing outside China, that is no longer the case.
"This year, it's more child education, lifestyle and potential migration has now bubbled to the top as the key motivator," Investorist’s chief executive Jon Ellis said.
Melbourne Suburbs Offer Good Schools and Contemporary Apartments
In Melbourne, a foreign buyer’s checklist predominantly features suburbs steeped in history with close proximity to private schools, such as the leafy blue ribbon suburbs of South Yarra, Toorak, Canterbury, Kew and Hawthorn.
Ms. Mi said Asian buyers, in particular, look for contemporary apartments with house-like proportions or high-end residential homes, particularly those with large indoor and outdoor living areas, several bedrooms and separate butler’s pantries or kitchens.
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"The sweet spot for most top-end buyers is anywhere between A$3 million ($US2.3 million) up to A$8 million (US$6.2 million)," Ms. Mi said.
A four-bedroom modern apartment on Market Street in a former historic warehouse in the heart of Melbourne, listed with Kay & Burton real estate agency, is seeking offers between A$7 million (US$5.48 million) and A$7.7 million (US6.03 million). It has attracted significant foreign interest because of its scale, stately original features and central location.
This Market Street property in a former historic warehouse in the heart of Melbourne, is priced at A$7-A$7.7 million. It is attracting significant interest from luxury buyers, including those from overseas, because of its scale, stately original features and central location.
Kay and BurtonInquiries from international buyers have also been strong for a property on Hartley Road in Wonga Park, Ms Mi said, because of its luxury and executive lifestyle 45 minutes from Melbourne. The home has an asking price of between A$7.5 million (US$5.88 million) and A$8 million (US$6.3 million).
Inquiries from international buyers have also been strong for this property on Hartley Road, Wonga Park, seeking offers in excess of A$8 million.
Kay and BurtonMore:Sale of Sydney Mansion Logs One of the Priciest Residential Deals in Australia
Interest in Lifestyle Properties on the Rise
Interest in owning an Australian lifestyle property in a coastal or rural area, continues to gather momentum due to the sector’s safety as an investment and desirability as a status symbol, said Sotheby’s South Australia managing director Graham Bowie.
The agency has fielded significant inquiries from international buyers on a number of boutique vineyards recently, including the sale of a A$2.5 million (US$1.96 million) 87-acre luxury Macclesfield property in January.
Similarly, a new listing in the famous Tanunda wine region in the heart of South Australia’s Barossa Valley, with a four-bedroom home and vineyard that includes Shiraz, Semillon and Alicante Bouschet grapes, is expected to attract a lot of attention from foreign buyers, as is the listing of Highbank Wines, a boutique operation on Maaoupe Road in Penola, which generates about A$400,000 (US$313,360) of income for its owners annually.
South Australian vineyards such as Highbank are attractive for foreign buyers wanting manageable and income-producing Australian lifestyle properties.
Sotheby’s South Australia"Australia and New Zealand are the flavor of the month at the moment for boutique vineyards for the overseas market," Mr. Bowie said.
Lifestyle properties within world class wine regions, such as South Australia’s Barossa, were relatively affordable on a global scale, and foreign buyers were enamoured with the ability to produce their own wine, Mr. Bowie said.
"They’re familiar with each market and speciality, and they’ve done their homework," he said. "They’ve checked out the property online, they’ve looked to see if it produces an income and then they look at management companies to run the vineyard for them."
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Schools, Views and Grand Estates Make Sydney a Popular Draw
In Sydney, the city’s eastern suburbs offer foreign buyers an abundance of quality private schools, highly sought-after harbor views and grand family homes and estates.
Education motivates a lot of international buyers who would only consider prestige suburbs such as Vaucluse and Rose Bay for this reason, said Sydney Sotheby’s International Realty managing director Michael Pallier.
"They’re looking for premium homes with a view and want it to be close to the schools and of a high quality," Mr. Pallier said. "They don’t want something that requires a lot of renovating and want something they can move straight into," he added, highlighting a A$6.9 million (US$5.4 million) John Dykes Avenue property in Vaucluse, coveted for its Sydney Harbour Bridge views and quality renovations.
