Why invest in foreign property markets?
As we move towards a Global Economy, investment opportunities in all markets are being presented to foreign investors. They are fast becoming aware of the need to take advantage of these opportunities in the every stage of the product cycle, as evidenced by Asian markets in the past few years. They are looking at markets which have either an underdeveloped infrastructure, or a solid base and are emerging with global influence. In both cases, financial returns can be quite rewarding.
Why invest in Australia?
Australia has traditionally been a safe and politically stable country and it exerts a positive influence on the world at large. In fact, the World Competitiveness Yearbook stated in 2003 that "Australia is ranked as having the lowest risk of political instability in the world", coupled with an economy rated as the most resilient. Its GDP is consistently growing at a level in excess of the global average and its products are in demand across a varied range of markets. The yearbook further stated that Australia has an open, efficient and transparent legal framework, and in terms of competitiveness, Australia's laws are ranked as the second best in the world ahead of the United States and the United Kingdom.
Ownership of Australian property is a simple and secure freehold investment with potential for capital gain and a regular income stream as well as many other advantages. From a capital gains perspective, in the past 100 years the property market has generally doubled every 7 - 10 years, whilst annual losses have been quite rare.
Investing in other property markets can be very risky due to their volatility, whereas the Australian market has a documented history of consistent and steady growth in quite a stable environment.
Are there any regulations to purchasing property in Australia?
Australia welcomes foreign investment, but like most countries has regulations that apply. For overseas investor to purchase property in Australia they must have the Australian Government's Foreign Investment Review Board (FIRB) approve them to buy the particular property. The Government has laws which determine what type of property foreigners can and cannot buy. www.firb.gov.au
What are the types of property investments available?
Foreign Investors may purchase the following:
- House and Land Packages
- Home units, Townhouses, Villa's etc
- High Rise Apartments
- Vacant land (construction to commence within 12 months of purchase)
All properties MUST be New or newly constructed having never been occupied or previously sold.
- There are several exclusions to this rule with a few developments under law being able to market existing properties (2ND hand) to foreign nationals. Further information available upon request.
What are the advantages of House and Land Packages?
With the large interstate migration there has been a high demand for house and land rental properties on the fringes of the CBD areas. These packages tend to be very attractive to the Investor, costing from $AUD300,00 and giving possible rental returns of 5-7 percent.
What are the advantages of High Rise Apartments?
If a long-term objective is to maintain the property for your own use and enjoy the great benefits of the Gold Coast's holiday lifestyle, then high rise apartments may be more of interest. This property tends to be along the beachside precincts.
What are the advantages of buying "Off-the-Plan?
Buying "off-the-plan" (i.e. before construction has commenced) has become a popular way for a foreigner to enter the Australian Real Estate market as it is easy, reliable and less time consuming. A deposit of only 10% is required with no more payments until completion which maybe 1, 2, or even 4 years away. The Investor then has the opportunity to gain Capital growth during this planning and construction stage.
What is the Quality of Construction?
There are building regulations to ensure the quality of the developments meet standards set by Government Authorities.The Queensland Government has directed builders to offer guarantees of up to 6 years to rectify any defects in construction. In most cases the standard of construction and fixture and fittings, especially in High Rise developments, is at a Premium Level due to the competition in the market place.
Are there any Inclusions?
All properties come with the standard fixtures and fittings of carpets and tiling, stove and wall ovens. Some developers may offer additional items at no charge, including dishwasher, curtains and blinds, landscaping, etc.
House and Land Packages generally are finished completely, with nothing more to spend. These properties are known as "turn key" packages and are very popular with overseas Investors.
Most developers of High-Rise apartments will offer furniture packages with the aim of achieving a standard in line with the quality of the development. If the Investment is a holiday apartment it makes sense to take up the furniture package at settlement. However, if the investment is a house and land package in the suburbs it would not be necessary to buy a furniture package as tenants will generally bring their own furniture.
How much deposit do I need?
For 'Off-the Plan" High-Rise properties, an initial deposit of 1% of the purchase price is required by the developer at selection stage and/or on signing of the contract. Usually the contract is then unconditional with finance having to be organised approximately 2 months before settlement.
For House and Land packages, an initial deposit of $1000 is required by the developer to confirm an interest in the property. The balance of the 10% deposit is required when finance has been approved and the contract becomes unconditional. In both cases these deposits are generally held in the Solicitors Trust Fund account. The monies are protected by law in the unlikely event of the developer not being able to fulfill its obligations.
An overall deposit of 20-30% of the purchase price including the 10% deposit is normally required by the Australian Banks prior to finance approval for Foreign Nationals.
What are the Finance options available?
Most Banks in Australia will offer finance to Foreign Investors. Ranz International Realty staff are able to liaise with interested parties and recommend them to a variety of Financial Institutions that will answer all queries, obligation free prior to any property purchase. These Independent Finance Brokers are experienced in property investing and can give a breakdown of all costs that are associated with a property purchase.
Are there any other costs beside the purchase price?
As well as the purchase price Investors should note that there are extra costs and certain duties that need to be paid to State and Local Governments.
The major extra charge is Stamp Duty, a State Government tax levied as a percentage of the purchase price. Other expenses include:
- Lawyer's conveyancing fees
- Insurance on the building and contents
- Body Corporate fees if applicable
- Maintenance
Do I need a Visa to visit Australia?
Yes, you will be required to obtain a visa to enter Australia. It is quite easy - just inquire at the Australian Embassy or Consulate in your City. For special visa requirements including student, retirement, or business visa's, Ranz International Realty is more than happy to introduce you to a reputable Migration Agent. or visit www.immi.gov.au
Can someone show us property in Australia?
Ranz International Realty will give a much personalised service, including transfers from the Airport, Accommodation assistance, Fully escorted tour of property analysis and locations.
What is Australian Law for purchasing property?
All property transactions are governed by strict State property and consumer laws to protect both the seller and buyer. Please note all deposits are placed in trust accounts which are protected by law and monitored by Government Authorities.
It is law that the purchaser engages the services of an Australian Lawyer to examine the contract and further act on the purchaser's behalf. You will need to appoint them as your Lawyer with an appointment letter and Power of Attorney.
Not only will the Lawyer advise on legal issues surrounding the contract, they will act on your behalf in the conveyancing process to transfer ownership of the property from the seller to the buyer. The Lawyer will also organise for Foreign Investment Review Board (FIRB) approval.
Ranz International Realty is more than happy to recommend Lawyer's who are very experienced in International property transactions.
Can the property be sold?
Yes they can, however, all "secondary sale" properties in Australia must be resold on in the Australian domestic market.
For any other questions you want answered, please contact us
