Knight Frank collaborated with its Asia-Pacific colleagues last week to present a range of Australian properties to potential investors. Despite the massive interest shown towards the Australian market, the one thing that comes to everyone’s mind is the impact of changes in Australian property taxes for foreign buyers.
To learn more of the impact, Knight Frank Australia’s Paul Henley, Matt Whitby, Tim Holtsbaum, John Bowie Wilson, Tim Grant, Stephen Kelly, Eugene Evgenikos and Nic Purdue conducted the formal seminars in Kuala Lumpur and Penang, alongside Sarkunan Subramaniam, Knight Frank’s Managing Director for Malaysia and James Buckley, Executive Director for Capital Markets, Malaysia.
The team held scores of one-on-one client briefings as part of an Australian Property Forum Malaysia Roadshow, presenting an exclusive selection of Australian investment and residential development opportunities.
“Australia is of much interest to Malaysian investors due to its strong underlying economic fundamentals, including a record-low interest rate environment. With interest rates having dropped to their lowest ever, and a stable political scene with the Federal election result, combined with an ever-growing population, Australia is well positioned for offshore investors,” said Knight Frank Head of Commercial Sales Paul Henley.
“Recently, Malaysia’s SP Setia purchased 288 Exhibition Street, Melbourne. This is just one example of the growing interest from Malaysia into Australia’s commercial property sector.”
Meanwhile, Knight Frank’s Head of Research & Consulting, Australia Matt Whitby said Brexit is expected to accentuate the capital flows into Australia. It will benefit from Brexit and other global uncertainty, as it remains a safe-haven for investors. With volumes slowing over the past quarter, mainly on the back of limited supply of assets, Brexit might accentuate the capital flows into Australia and volumes will pick up in the second half of 2016.
“Australia’s economy is the envy of the developed world, growing at 3.1% as at Q1 2016. Sydney and Melbourne are driving performance, while our population is strong, with a growth average of 1.5% across the country,” he added.
Sydney alone accounted for $19 billion (RM58.28 billion) over the past two years, predominantly from Asia. Total Malaysian overseas investment into real estate globally was steadily increasing; however fell back in relative terms over the last financial year.
The Malaysian investment into the Australian real estate has averaged $750 million (RM2.3 billion) over the past six years – however deal flow has not been as prevalent over the past year.
According to Henley, in time we can see how much the latest Australian taxation laws for foreign investment will impact Malaysian buyers into this market. Despite the recent stamp duty changes imposed on foreigners purchasing residential property, interest from Malaysian privates and institutional investors is remarkably strong.
“We expect many commercial, hotel and retail assets transactions from Malaysian investors over the next year. These types of assets are not impacted by the tax changes, and some residential specialists will still show interest at the right pricing metrics to build scale,” added Henley.
This article is published for Knight Frank