Global elites target Sydney property

Knight Frank has an interesting note out today looking the global trends in high net worth individual’s (HNW) habits regarding residential property investment (new homes that is):’

The ramifications of the financial crisis are still being felt around the world, and the political instability that emerged after the Arab Spring
is still evident in many countries. Amid this uncertainty the overall trend in global property investment over the past year has been a search for safe havens by investors.

According to the results of our survey, buyers are increasingly drawn to cities they perceive to be sheltered from wider economic issues.
In fact, some 47% of respondents noted that the ‘safe haven effect’ was the biggest draw for their respective markets.

Locations including New York, Monaco and Dubai fulfil this requirement and, accordingly, international buyers account for a growing share of their respective new-build markets. As well as offering a shelter from wider economic troubles, these locations are felt to offer the potential for long-term capital appreciation. In Monaco and New York prices have increased by 8.2% and 13.6% respectively over the 12 months to June 2013.

Political and economic risk in a buyer’s home market was also named a key driver of international demand by 39% of respondents. The euro crisis, for example, has encouraged more buyers resident in the eurozone to look further afield in order to diversify their investments and move at least
a portion of their wealth out of euros.

More punitive wealth taxes within countries like Italy, France and Spain have also encouraged some buyers resident in these markets to look elsewhere.

Business and currency issues were highlighted as other key factors in a wealthy individual’s decision to buy new-build property overseas. In the past year the South African rand has taken a tumble, particularly against sterling, giving certain international buyers an effective discount on property.

Government policy can also have an impact. In Barbados, where purchasers are primarily lifestyle driven, recent adjustments to the residency rules that favour high-net-worth individuals have resulted in a spike in property enquiries, particularly at the top end of the market.

Finally, respondents noted that education and lifestyle are playing an increasingly important role when it comes to cross-border property investment. Cities which are home to world-class schools and universities, as well as offering a high quality of life and safe environment, stand to benefit in the long-run.

Clearly Australia falls into the final rationale and Sydney did rank number one with Hong Kong HNWs and number three for Indonesian:

Capture

 

One man’s safe haven is another man’s bubble.

Comments

  1. Here’s a thought.

    Ban any residential property purchase by someone who does not live here unless they are Australian citizens living overseas. Period. No exceptions.

    Ban property purchases by those who live here, unless they are citizens or permanent residents. Exceptions to be permitted only for someone who might be on a work permit with a duration of at least 3 years from date of purchase, and who stumps up not less than 50% of the purchase price from own funds. That’s it.

    Would that help in cooling things off?

    I haven’t included commercial property here – should it be?

    Perhaps, that’s simplistic. I’m probably ignoring lots of permutations and combinations. To my mind, this is a simple issue and can be dealt with simply.

    While there are so many things in life that are complicated, some things are simple. No need to complicate them like we derive a sense of fulfilment from doing so.

    • slightly_perturbed

      How about banning Australian Citizens from owning more then one investment residential property? Or is that too radical?

      Aussies have had capitals gains tax for a while, Kiwis talk about it all the time, but for NZ government it is just too radical an idea to try and install it.

      It is also to radical a statement when I tell my parents that their baby boomer generation has effectively made debt slaves out of mine. They had free Uni education, cheap as chips real estate purchases, free healthcare and my favorite, no reality TV shows.

      I look at their photo albums from sixties, all long hair and tie dye shirts, Beatles posters and joints in their lips. Nice. Real nice. Zero integrity.

      • They should just limit any NG/deduction claims to a single property, own more than 1 and you cannot claim anything from them. CGT discount should also be killed off for investment properties. Speculation should be directed to the share market, not to houses.

        27% of investors own at least 50% of the investment properties, all claiming deductions and getting tax benefits at the public at large’s expense.

        MacroBusiness should do an analysis on how this concentration of property ownership is distorting the market.

      • Negative gearing in property investments should be permitted only against income from property investments – like it is in most rational countries.

        At the moment, property investment is promoted with “tax benefits” – because you can make a loss and subsidise your tax from other sources of income i.e. someone else’s taxes pay for your medicare, law and order, etc, etc. Limit the offset of losses from property investment to gains from property investments – operating losses against operating profits, and capital losses against capital gains.

        No-one’s listening. Well, no-one that has the ability to do anything, anyway.

    • How about the FIRB fulfill its charter and ensure compliance with the laws we already have?

      The FIRB (in conjunction with the NSW State Titles office) immediately conduct an audit of the most recent 1000 sales of existing dwellings in the greater Sydney area, to check compliance with the purchasers residency requirements under the FATA.

      • That would be a good start.

        Interesting take from the below article:

        http://www.irishexaminer.com/business/fast-rising-property-hotspots-across-the-globe-spur-easy-money-bubble-fears-248354.html

        “According to Goldman Sachs, in 2012 and the first half of 2013 fully 60% of home purchases were all-cash transactions — double the pre-crash figure — as Wall St and foreign investors swooped in on distressed markets.”

        Would love to know what the stats are for Australia.

      • Well said, as discussed in previous blogs the rules of the game are not fair any longer (a stable market requires fair and transparent regulation and laws that underpin it’s operation)

        thus a contemporary solution would be for the citizens and underprivileged of Australia to take matters into their own hands and contact a big data analysis thus:

        1. A few highly skilled ICT technicians to donate their services free of charge to interrogate the 6 or so main data centers in Sydney for every Sydney Council database that contains residential titles and block numbers, and extract this meta-data;

        2. Interrogate the Feds Immigration data centre for 457 and temporary visa holders;

        3. Interrogate the Feds Electoral Commission data centre for citizens list;

        3. Do a metadata cross reference for citizenship or visa status;

        4. Indentify trust entities and corporate entities and their addresses.

        5. Outsource and report all information to the Chinese Government and Vietnamese Government Department of fraud, money laundering and embezzlement.

        I am sure the Chinese and Vietnamese Governments would gladly donate a few thousand public servants to do the rest of the metadata cross referencing free of charge and hunt down those criminals evading tax and complicit in transnational money laundering in Australia.

        Open for business indeed Joe Hockey you sniveling dirty rat…

      • Like your thinking Tea M, but where the Chinese are concerned many of the offenders are key players in the Government. They’d be trying to nail themselves!

  2. What I cannot get used to: both Liberals & Labor have turned their back on the general public.
    That Liberals behave that way is to be expected. Proves Labor now equals Liberals when it comes to long-term agendas, at least for shelter.
    And now we have to wait another 3 years before putting Labor & Liberals last on a ballot.