“We’d been getting a bit drunk off this flood of money coming from China…”
Recently, Investorist Founder and CEO Jon Ellis was interviewed on the Real Estate Talk podcast hosted by Kevin Turner. Here are some of Jon’s observations about the current state of the market regarding foreign investment in Australian off the plan property.
The amount of Chinese cash which once poured into Australian property has fallen considerably, leaving developers and agents scrambling to recapture those record volumes of investment.
Investorist’s recently published Australian Off The Plan Sentiment Report showed that although interest in selling off-the-plan property to Chinese investors has declined, interest was increasing in the surrounding economies, which are growing.
Whilst Jon said it was unlikely the amount of foreign money which had flowed into the property industry’s coffers would ever be replicated, similar market conditions in other south-east Asian countries meant the area’s investment potential wasn’t yet tapped out.
“We’d been getting a bit drunk off this flood of money coming from China,” he said. “Once the tap turns off a bit, people get a bit anxious and they say ‘where can we go next’?” says Jon.
One of biggest potential emerging markets is India. Of all the thriving economies of south-east Asia, India and China shared the most similarities. Because of this, more agencies and developers were setting up offices on the subcontinent in an effort to tap into a market that has so far been relatively un-involved in Australian property.
“They’re thinking: ‘OK, this is new. There’s just as many people here in India as in China and there’s a lot of money getting around. According to our research, last year just 6 per cent of Investorist clients were looking to sell in India. This financial year, it’s 21 per cent” Jon said.
This represented the largest increase for all countries. By comparison, Chinese sales expectations went down from 86 per cent to 60 per cent, a fall of 26 points.
The other rising stars within the industry were Vietnam and Indonesia, two of the region’s so-called “tiger cub economies”. The term relates to countries undergoing rapid economic growth and an increase in the population’s standard of living.
“Increasing investment into Australia would be dependent on whether or not the companies who were starting to focus on these newer markets can sell the Australian dream of property investment to cashed up Indians, Vietnamese and Indonesians”.
“Whilst some market fundamentals in these three nations were similar to China, they so far lacked a culture or history of investing into Australia”, said Jon.
“Wealthy people in those countries are also looking for lifestyle attractions and asset protection. We’re one of the only countries that withstood the GFC. We’ve still got relative political stability. We’re one the most liveable countries in the world, and we’ve got some of the best education in the world. Why wouldn’t we be attractive?” he added.
Investorist’s Australian Off The Plan Sentiment Report is a comprehensive industry report providing an analysis of demand, current sales activity levels and future predictions of the dynamic Australian off the plan market.
If you’d like more information on Investorist’s Australian Off The Plan Sentiment Report, click the link below to download