Real estate investing in Australia has been popular among property enthusiasts in Malaysia for simple reasons: migration and education. Australia has a long established reputation as a tourist and education haven, and it is also the choice of migration destination for many Malaysians. Also, more Malaysians are investing in Australian real estate because of the relative stability and favorable economic conditions.
Melbourne has long been the real estate investment destination of choice for many Malaysians
Malaysian real estate developers too have jumped at the opportunity to buy land in Australia and launching projects by joint-venturing with Australian property partners.
There are, however, some potential pitfalls when it comes to investing in real estate in Australia:-
- House prices in Australia has been weakening due to poor buyer sentiments in 2011.
- There are economic concerns with the flattening of the GDP and poor hiring conditions due to slowing economic growth.
- Eurozone uncertainty and weakening consumer confidence. These are the same factors which affected the Hong Kong real estate industry in 2011.
On the upside, however, in 2012 there will be quality real estate properties at good locations that were seemed to be expensive to some. Those who are previously on the hunt for good property for sale in Malaysia will now have more options – if they look further to Australia.
What To Look Out For When Buying Property In Australia
There is a scheme called the National Rental Affordability Scheme (or known more popularly as NRAS) which was launched back in 2008. It is a governmental scheme to shift its liability of low cost housing to the private sector.
This scheme is designed to encourage private real estate developers to build properties to house people who are on government assistance. Therefore, those who are currently occupying low cost houses which are located on prime locations could be moved elsewhere – and as a result, the area could be freed up for premium development.
Property Options vs Physical Properties
Another consideration that the Malaysian real estate investor should make is to look at alternative investment options – namely property options. These are remarkably similar to stock options expect is that the “stock” in question is yet-to-be-built real estate.
This is how property options work:
- The property broker will underwrite a portion of the project (say, 70%) at a wholesale price (typically discounted at 10-20% of the listing price).
- The broker then sells these units to buyers who pay an “option fee” of about 15% of the unit price. During the first 2-2.5 years (when the property is being developed) there is no further payment.
- Typically six months after purchase, the buyer can sell the option for a profit, or to keep the property and wait for the building to be completed.
- Remember that if the buyer decides to exercise his sell option, then the property broker has the exclusive right to sell (at the retail price) the property of option holders.
- If the property broker is unable to find a buyer, the property broker should then return the deposit topped with a good interest return.
If you need more information on property options, check out this informative (but somewhat dry) Wikipedia article on the subject -
