Australian Property

scumbag · 14-01-2016, 09:12 AM

Hi guys,

There are so many adverts (almost daily) on various sources about Australian property. They go on about how they offer rental guarantees for 6% (2 years), how Melbourne is the most livable city with this great influx of people, how Perth / Brisbane are poised for some awesome growth, etc, etc. New apartments, great exchange rate (5.5 or something now to the HKD), a lot of them in the CBD area, etc, etc.

Oh, that and it's supposed to be relatively easy to get 80% financing.

All sound too good to be true (if one is cynical) and I am not sure if these places can really support that many new apartments. Everyone seems to be buying in Australia now.

I was hoping to get your views on whether you think Australian properties are a good investment and to hear your views / experience on investing there.

Thanks!

HK_Katherine · 14-01-2016, 01:10 PM

Australia is certainly a good market although is currently heading for a slowdown. It you can normally get an identical property to the one advertised for much lessby going to a normal estate agent in Australia rather than these ads.

shri · 14-01-2016, 01:19 PM

And the guaranteed return comes with lots of disclaimers + usually built into the sale price.

Jonathanlim · 14-01-2016, 05:56 PM

ROI of 5% per annum is do able. Any substantial amount more that would be questionable unless there are other perks included.

bdw · 14-01-2016, 07:06 PM

A favourable exchange rate may be in your favour, but that's about it. Apart from that, Australia is about to become the next Greece, they rely too heavily on mining and China and now China is in a bit of slump and they will take Australia down with them. There is general consensus of a huge property bubble and market crash imminent and things are going to get pretty nasty. Sell everything you have in Australia right now and its going to be a cataclysmic year. It's fairly easy to google this and see how bad the sentiment is right now.

I'm not sure which dickhead is telling you its a good idea to invest in Aus right now but it couldn't be further from the truth. I happen to have a couple of properties in Perth so hope I'm wrong about this but doesn't look that way.

How about Malaysia? You can get around 6% rental return and 4% mortgage rates there. Better than Australia that, even if they werent about to fall off a cliff, would give generally around 4% returns with 6% rates.

hullexile · 14-01-2016, 09:29 PM

I get 9% here in Phils. We had a queue to rent so could have got 11% if we wanted to screw the tenants.

Paxbritannia · 17-01-2016, 09:51 PM

Originally Posted by hullexile:

I get 9% here in Phils. We had a queue to rent so could have got 11% if we wanted to screw the tenants.

Can you share more about your experience investing in the Philippines?

HK_Katherine · 17-01-2016, 10:24 PM

Originally Posted by Paxbritannia:

Can you share more about your experience investing in the Philippines?

He has a Filipina wife. Makes a huge differences. Foreigners cannot own land in Philippines which rules out houses, only condos with special arrangements are available for non-Philippinos. I would touch them personally. Too much regulatory risk in Phils.

hullexile · 18-01-2016, 08:01 AM

Originally Posted by Paxbritannia:

Can you share more about your experience investing in the Philippines?

Restrictions, RISK, local knowledge and contacts, opportunity.

As Katherine says foreigners generally can't own land (though this should be lifted if the Philippines goes for TPP membership) so you are limited. There are ways round this, the most common one being to buy in the name of a Filipino then get a power of attorney. Of course if you die, or were to get killed, then they get the property! Not a route I would suggest!

Risk, if you buy outside the big publicly listed developers. We have 5 properties.
1. Developer is now in jail for fraud. We have basically written this off. Luckily this was the only one on mortgage so we have just handed the keys back so our loss is not that big. (If you are concerned about the ethics of this, the state owned mortgage company is implicated in the fraud).
2. Brought it cheapish as they needed the money urgently. My wife knew there were plans to develop the area. Has tripled in value and if we develop it we can increase that easily.
3. Our main house. Developer went bankrupt/ran off with the money. We bought after this so did not affect us but the person we bought from made only 10% in 10 years.
4&5. Bought in one of 5 resettlement towns built for residents of a city wiped out by Pinatubo. Only people who were residents of that city or their children can buy property in these resettlements. Given there is no extension of the towns possible and with growing populations the scope for profit is high.

From the above you can see local knowledge is important. My neighbour bought 5 apartments in the wrong place at too high a price and too high a rental. They are mostly empty.

If you wanted to invest in Philippine property I would do it through the stock of the big developers, e.g Ayala or SM Prime.

fth · 01-02-2016, 12:52 PM

From someone in living in Sydney. Stay well away. New build apartments which can be bought by people who are not citizens or permanent residents have been springing up like mushrooms, bank valuations and developer valuations are drifting apart (the wrong way). Mining dependent cities (eg Perth) have issues not only with overbuilding but a potential shrinking tenant pool.

I rented for a short period in Bondi Junction in a recently developed apartment and the build quality and building management was awful for a "premium" building and location.

If you can the true pessimist's view I've got one article below, but there are plenty more on that website.

More reports of Australia's shoddily built high rises - MacroBusiness