The surprising result in the federal election could boost new overseas real estate investment in Australia.
Certainty is back in the market with the re-election of the Coalition government. Hence, real estate funds might opt to inject funds into Australia instead of putting them into less stable global investment destinations, according to Simon Storry, head of international investments, Australia, JLL.
“Some of the key reasons investors target Australia is because of transparency, liquidity, and political stability. We’ve always had the transparency and liquidity, and now as a result of the election, we’ve got the stability. It adds weight to the rationale for investing in Australia,” Storry said.
JLL reported that Australia stands out against its traditional capital rivals, namely the UK and the US. The two countries are presently facing issues on Brexit and a global trade war with China, respectively.
“With uncertainty in those markets, a lot of groups are focusing on stable markets with sound growth prospects like Australia,” Storry said.
The country recorded a significant flow of cross-border investment in 2018, equating to $9.46 billion or 48.4% of all transactions by value. This development was triggered by low interest rates and a cheaper dollar, together with the fundamentals of the Australian market.
In addition, the quick rebound in the share market should also lead to positive effect in real estate markets, according to Marty Janes, head of metropolitan sales and investments, JLL.
Build-to-rent becoming a concern
The government’s decision to retain a 30% withholding tax on income from investments in build-to-rent has become a hot topic among offshore investors placing capital in the country.
The Property Council of Australia has lobbied for a 15% tax – the concessional rate that applies to housing deemed “affordable,” as well as student accommodation – to unlock institutional funding and bridge a gap in Australia’s housing needs.
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