AU Foreign cash stacks up in Western Australia's property market
Property Here - Sunday, April 21, 2013
FOREIGN investment in Western Australia's property market has doubled in recent years, with experts fearing it is adding to the rising cost of real estate.
Latest data from the Foreign Investment Review Board shows that overseas investment in WA properties increased from 368 in 2009-10 to 877 in 2011-12.
Real estate agents said about one in 10 off-the-plan apartments in Perth were now bought by Chinese investors.
Metropole Property Strategists director Michael Yardney said local buyers could be caught paying too much for off-the-plan apartments because the presence of cashed-up foreign buyers was keeping prices artificially high.
"Over the last few years local buyer interest from investors has been poor,'' Mr Yardney said. "
This means many projects have gotten off the ground due to a large number of pre-sales to foreign residents.
"On completion, valuations for many off-the-plan purchases have come in 10 per cent to 15 per cent below contract price. Unfortunately some local investors have also been caught and paid too much for the properties.''
Mr Yardney said foreign buyers were happy to pay higher prices for Australian real estate because it was a stable asset in a politically and economically stable country.
Mark Butler, managing director of WA company Otan Property Funds Management, said there had been growing interest in WA property in the past two years from foreign investors and from Chinese investors in particular.
He attributed the growing interest to the Sydney and Melbourne markets slowing down, WA's strong business relationship with China and the recent rush to secure Chinese investment by government and industry.
Mr Butler said while foreign investors had helped get apartment developments off the ground in Perth, he had seen no evidence of their investment artificially inflating prices.
Mark Hay Realty Group principal Mark Hay also said Chinese investment in WA, though still less than in Sydney or Melbourne, had increased across the board.
Real Estate 88 director Jasmyn Wright, whose company is selling the Adagio Apartments in the city, said many Chinese buyers were attracted to the high standard of schooling in WA.
"We've had a number of clients come down and buy a property their kids can live in while they go to school here and when the kids go home, they sell the property and pay for the kids' schooling with the profits,'' she said.
Read more: http://www.news.com.au/realestate/news/foreign-cash-stacks-up-in-western-australias-property-market/story-fndbaln9-1226625223501#ixzz2R9pRsXq6