Singaporean investors in Australia residential property favour capital appreciation

CAPITAL appreciation, as compared to rental income, tends to be a slightly higher preference for Singaporean investors in Australian residential property, said Knight Frank Australia head of residential research, Michelle Ciesielski.

"They hold onto their properties much longer than other international investors, and we often see more generational buyers from Singapore," she added.

In Australia, non-resident international buyers are generally limited to purchasing new or off-the-plan property. That means foreigners typically do not buy from the resale market.

This is due to the Australian government's policy to channel foreign investment into new dwellings, as opposed to established dwellings, to create additional jobs in the construction industry and help support economic growth.

Traditionally, about half of foreign buyers in Australia will purchase new non-landed apartments, and another third will buy a standalone or landed property. The rest tend to invest in a single land lot that will accommodate a standalone house once constructed, Ciesielski pointed out.

Among the country's capital cities, Singaporean professionals tend to be drawn to Sydney, while Singaporean students and their families are attracted to Melbourne, she noted.

This comes as Sydney is regarded as Australia's financial hub and matures as a global city, with strong investments in infrastructure, education facilities, and a push to increase density close to the city. Meanwhile, Melbourne is home to some of the biggest sporting and cultural events in the world, and has many exceptional schools and universities, she said.

Ciesielski also highlighted the country's "balmy summers and mild winters", which deliver an active outdoor lifestyle" that appeals to many around the world.

According to boutique luxury property agency One Global Australia's executive director Darien Bradshaw, Singapore-based buyers in Australia typically comprise expatriates, retirees, parents that are exploring migration and education for their children, university students, and wealthy families expanding their businesses Down Under.

Some purchasers also wish to create a diverse real estate portfolio, as most already own properties in Singapore and other major cities such as in the UK, he added.

However, buying overseas real estate comes with its fair share of risks and challenges. As much as possible, foreign investors ought to educate themselves on the markets they are interested in, such as by staying updated on the news, tuning in to podcasts, and reading the latest independent research reports, Bradshaw noted.

That is on top of appointing a licensed legal representative, accountant and local property manager to assist them.

Ciesielski said Australia continues to be a transparent market to purchase residential property, but buyers need to ensure they undertake the right preparation.

All international buyers must apply to the Foreign Investment Review Board (FIRB) before purchasing a new residential property in Australia, and a fee is payable before the foreign investment application will be processed. Seeking approval from the FIRB is property-specific, which means 1 application per property.

"The FIRB fee on application does not provide any assurance of securing the property, so it's important to seek guidance from property advisers along the buying process," she added. For instance, buyers need to know the different stamp duty surcharges in each state and the additional annual levies payable if investment properties remain vacant in some of Australia's major capital cities.

Also, Bradshaw recommends securing either a pre-approval for a loan if it is a completed property, or an opinion, if it's an off-plan property, as to whether the buyer will be able to obtain financing if the property were completed at the time of purchase.

Prospective buyers ought to pay attention to the track record of the developer and the agent, too. "In Singapore, agents selling offshore property must be licensed, and the Council for Estate Agencies has very strict due-diligence guidelines they must observe before they can market projects," he said.

READ MORE:

• Australian housing poised to woo Singapore property investors again
• Australia reopens to international visitors after two years