Australia Sees More Foreign Real Estate Investments Coming In

Posted by Staff Reporter ( on May 04, 2016 09:16 PM EDT
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SYDNEY, AUSTRALIA - APRIL 28: A for sale sign is displayed outside a home in Edmondson Park on April 28, 2016 in Sydney, Australia. A report by The Grattan Institute release on Monday found the top 10 per cent of earners collect nearly 50 per cent of negative gearing tax deductions, prompting calls for the Federal Government to change tax breaks on housing investment available through negative gearing and capital gains tax discounts. (Photo : Brendon Thorne/Getty Images)

Australia is one of the most popular countries where foreign investors want to put their money on. A recent report from the Australian Financial Review said the real estate leaders in the country are eyeing more offshore investments flowing.

According to the AFR, investors and leaders of largest real estate trusts in the country foresee higher investments particularly in the listed property sector from foreign investors. The expectation is buoyed by the higher outlook on yield and a more tightened capitalization rates.

Tarun Gupta, the new chief financial officer of Lendlease, shared to the attendees of Macquarie Group's annual equity conference in Sydney that its partners remain strongly interested in investing in Australian real estate. Some 100 offshore investors participated in the event.

David Harrison, the chief executive of Charter Hall, said that contrary to the belief that foreign investment in the country is slowing down, they see a healthy appetite among offshore investors. The AFR quoted Macquarie Capital's head of real estate in Australia, Antony Green, saying, "Whilst some might argue Australian REITs might seem well priced, there is actually further room for growth. Speaking generally, investors are drawn to our REIT sector given the earnings transparency backed by well-operated real estate held in conservative capital structures. REITs are providing a yielding investment at good spread to bank deposits."

Chinese buyers are among the largest investors in the country, and in an earlier report from The Wall Street Journal, it was revealed that investments from China doubled in the last financial year ending on June 30, 2015. According to the report citing the data from Australia's Foreign Investment Review Board, approved Chinese investment for the said period amounted to AU$24 billion, up from the AU$12 billion the previous year.

The increase in Chinese investment comes beneficial for Australia as it drives the construction of residential properties in the country. It also helps Australia cope with the downturn in the mining sector.

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