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Asian capital to continue flowing throughout Melbourne

People & Companies / Latest News

Australia

Dec 10 2017

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Melbourne is well placed to attract foreign capital into the new year and beyond, despite media noise suggesting otherwise, according to one industry expert.

Savills Melbourne’s state director for CBD & Metro Sales, Clinton Baxter, said Asian capital in particular was expected to continue flowing throughout Melbourne as much of the investment was motivated by factors other than specific financial return, such as capital preservation, capital stability, education and family migration.

The insight comes on the back of Savills releasing its latest international report Impacts: the future of global real estate, which pinpoints income as the “key reason for investing” in the coming years.

Referencing the report, Mr Baxter said the combination of economic stronghold and relative economic and political stability would “augur well for those seeking stable, long-term capital growth and secure incomes, rather than those concerned with a high rental yield in sectors such as prime offices”.

“Nowhere is this trend more pronounced than in Melbourne, or Australia more generally, which has benefitted throughout the past 10 years from a phenomenal flight of capital from Asia seeking economic, political and capital stability, plus the benefit of competitive income returns,” he said.

“Melbourne protects the income and capital of global investors with a unique combination of stability supported by massive population growth resulting from its liveability, ongoing ‘Asianisation’, and first-class education and employment opportunities.”

Mr Baxter said that as an ever increasing number of foreign investors sought to invest in the Melbourne growth story, values were increasing and yields were correspondingly sharpening. 

“This is as a result of the incredible buying power of Asian investors in particular,” he said.

“We only need a small increase in percentage terms of foreign buyers to have a profound positive impact on pricing and values in our markets.”

Mr Baxter listed areas favoured by Asia-based investors, such as the Melbourne CBD, Box Hill, Doncaster and Glen Waverley, where values of all forms of real estate have increased dramatically during the past five years, 

“This is due almost entirely to the impact of huge volumes of foreign capital,” he said.

Mr Baxter said the growth trend was “guaranteed” to continue throughout Melbourne as most of the foreign investment was motivated by factors other than specific financial return, such as capital preservation, capital stability, education and family migration.

“There are literally tens of millions of wealthy people in Asia, many of whom wish to migrate their wealth, and Australia is one of the most obvious choices for that capital,” he said.

“With our relatively small population and markets, it only takes a small uptick in foreign investment to have enormous impacts throughout our markets, which is precisely what we are witnessing.  

“There are very few alternative countries providing our combination of attributes for the uber wealthy of Asia to invest in. 

“We have many Chinese clients literally making overnight buying trips to Melbourne to secure commercial assets.

“Some don’t even make the trip, they simply purchase over email and wire us the 10 per cent deposit.”

 

SOURCE: Feature Article

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