The wave of foreign money flowing into Melbourne’s property market is set to continue in 2016 according to one major real estate firm.
According to Savills, the flow of offshore money to Melbourne has helped push the per square metre price of a number of real estate sectors in the city into record territory.
Savills claims land rates in the Melbourne CBD have pushed past $30,000 for the first time, while land in suburban Melbourne is on average worth a record $10,000 a square metre and land in the Southbank
district is selling for up to $20,000 a square metre.
Savills Australia's state director CBD & metropolitan sales, Clinton Baxter, said much of the demand for Melbourne real estate by foreign buyers had come from high profile international retail brands, student accommodation providers and buyers seeking properties with development and value-add options and that is likely to continue in 2016.
“Demand for retail, residential and commercial office investments will remain strong, irrespective of any market peak, while fundamental forces, including a flight of capital to safe haven countries such as Australia, immigration, and strong motivation to invest in a growth location persist,” Baxter said.
“It has been a phenomenally strong market for a prolonged period and even if we do see a peak in the market in 2016 it will have little impact as demand remains very strong, indeed as white collar employment picks up and the disconnect between the sales and leasing markets eases, we should see a further rise in local investor interest,'' he said.
Baxter said concerns that restrictions on the flow of money out of China would impact Australian property markets were misplaced given the sheer weight of funds, the volume of investors, and the wealth already transferred into Australia and other jurisdictions such as Singapore, Hong Kong and Dubai.
According to analysis of more than 80 transactions carried out in CBD and suburban Melbourne, valued at more than half a billion dollars, by Savills in 2015 off-shore buyers, including those from Malaysia, China, UK, Singapore, and Vietnam, accounted for 46% of sales by value.
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