Who buys them?


  • Business
  • Saturday, 04 Jan 2003

The following is a quick rundown of the type of investors who purchase properties abroad:  

 

·Long term investors who go for low-risk products. They go for something where rental can service the loan with no hidden costs like those for maintenance and repairs. 

“Tenants take care of these hidden costs which can go up to as high as A$10,000 per year. The lease period could begin from 10 years. Such projects are, however, rare,” says Global Link Realty senior investment consultant Norman Sia. 

Unlike Malaysia where landed properties are popular, Sia says it is the reverse in Australia.  

About four months ago, Sia promoted a Perth-based apartment property in the business district area with 180 units, 40 of which have been made available to foreigners from the region. 

“Half of this has been bought by Malaysians. Prices range from A$195,000 for a 350sq ft built-up to A$380,000 for a 650sq ft space,” he says. 

·Short-term investors who make a quick entrance and exit, all within a 3 to 5-year period. This group may balloon out in the boom period. 

“Some dispose of the property upon completion. Because there are no progressive payments – unlike the Malaysian situation – investors need only to pay 10 per cent of the purchase price. Upon completion, they pay the balance. 

“That initial 10 per cent is kept in the developer’s lawyer’s trust account. The developer does not use the money to build. They have their own bank loan. An investor can request that the 10 per cent outlay be transferred into a bank account to earn interest of 4.85 per cent per year. He gains from the interest and before completion of the project, he sells off the unit. This is called a simultaneous settlement. 

“For example, I buy a unit in a landmark project for half a million Aussie dollar and I sell it for A$800,000. My capital is the initial 10 per cent. I pay the developer the balance 90 per cent of the purchase price with the money gotten from the resale, pocketing the difference.” 

The hitch here, the foreign investor can only sell to an Australian or an Australian permanent resident. 

In a recent landmark project in Queensland called Q1, out of 540 units, 100 units were made available to foreigners. Malaysians bought 20 units. 

Prices ranged from A$300,000 for a 900sq ft space to A$8.9 million for a 10,000sq ft penthouse. 

 

·Malaysians who are emigrating usually go for landed property. However, there must be some outstanding feature like a waterfront home or one situated in a golf course. 

The 400-bungalow units in Tea Trees, Gold Coast, Queensland come with a golf course.  

A quarter of the units were open to foreign investors at a price of A$350,000 for the 5,000 to 6,000sq ft land area with a built-up to 2000 to 2,500sq ft. Investors choose from a total of 30 designs. Malaysians bought 30 units. 

The house would come fitted with oven, kitchen cabinets and other fixed furnishing. Investors move in with lose furniture. 

 

·The fourth category is parents who buy for education purposes. This segment, however, is small for some agents, but large for others. It all depends whether the local agent is representing another agent in Australia or the developer himself. 

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