Aussie apartment boost

The Australian apartment market is bucking a softening trend of the overall housing market, especially in Sydney.

Tighter Asian property rules lifting aparment market, especially Sydney

SYDNEY: Tighter government regulations introduced by some Asian countries to cool sizzling house prices are contributing to higher demand for new apartments in Australia, property services firm CB Richard Ellis said.

The Australian apartment market is bucking a softening trend of the overall housing market, especially in Sydney.

Capital growth for Sydney apartment units rose 3% in the year to May, while houses eked out only a 0.1% gain, according to research firm PRData-Rismark.

“The government tightening measures broadly across Asia are increasing the amount of interest in Australian properties,” Darien Bradshaw, executive director for CBRE's international project marketing in Asia, told Reuters yesterday.

Last year, Singapore introduced a new rule to cool property prices under which owners of Housing and Development Board (HDB) flats, or government-subsidised apartments, must stay in the property for five years before they can buy a second property.

The Chinese government has also introduced a series of new regulations including a home ownership tax to deter real estate speculation.

“There are limited options for the Chinese with money to invest other than keeping it in cash,” Bradshaw said. “So one of the options is obviously in the current climate is to look more and more overseas.”

He also said young couples who plan to raise more than one child are keen to own houses overseas, adding the targeted price range for Australian assets for Asian investors is anywhere between A$400,000 (US$430,000) and A$1,000,000.

“They've always got on the back of their mind ... where the second child may reside and live and be educated,” he said.

To capture the growing appetite for overseas assets among Asian investors, CBRE is casting wide.

Its sales teams in Hong Kong, Singapore, Kuala Lumpur and Shanghai, conducted a synchronised launch over a series of weekends to market a high-rise residential project in Chatswood, Sydney, called Metro Residences.

The efforts paid off with all 292 units offered in the first phase sold out in the first weekend in March.

Some Australian developers are positioning themselves for the Asian market.

Private property developer Meriton Group, headed by Australian billionaire Harry Triguboff, said it would develop in excess of 1,500 apartments in the next 12 months, compared with 1,000 units in the last year as demand from Chinese investors keeps growing.

“Chinese mainland residents have shown strong interest in our residential apartments with demand increasing every week,” James Sialepis, Meriton's national sales and marketing manager, said via an email.

He said 15% of Meriton's weekly sales were made to overseas Chinese, although the percentage was much higher if they include local Chinese buyers.

“Locations within a 15 km radius of the CBD that are serviced by good transport and educational facilities are in most demand,” he said.

By Reuters