Wealthy Cambodian Buyers Investing in Australian Properties
Australia has long been a destination of choice for property investors looking for overseas investments. The lifestyle, language, healthcare services and educational opportunities reinforces the country’s position as a world-class destination for investors. It has always been viewed as a safe haven with a strong and established legal structure, asset protection and multi-cultural society. “Cambodian buyers are purchasing properties in Australia so that it can benefit their kids to stay during the time of their education, or doing business,” said Chan Mlop Sokha from Sokha Law Firm.
For foreign investors, the prospect of a weaker Australian dollar in the last two years is boosting demand in the residential market taking advantage of the relative discounts offered by a weaker currency. This is particularly true for Cambodians where everything is settled in US dollars. “There are Cambodians purchasing overseas properties in countries like Australia, USA and Singapore.
The buyers are, of course, wealthy Cambodians either purchasing for their children living overseas or just to park their investment outside Cambodia,” explained Chhayleang Ngoun from Ratanaka Realty.
With the Australian dollar at a very low level, there has never been a better time for buyers to move forward on their buying decision. The Australian dollar has depreciated approximately 20 percent against the US dollar over the last few years. Therefore, buying interest is clearly on the up, as wealthy Southeast Asians who have been considering buying in cities like Sydney and Melbourne for the past few years are now making their decision. Many of the high-demand suburbs in Sydney and Melbourne continue to show strong long term growth over a number of years. The property market is currently facing an undersupply, which is part of the reason prices have been pushed up. However, Sydney has become way too expensive for many investors. Another market to watch-out beside Sydney and Melbourne is Brisbane which is a rising market where properties are selling fast.
The majority of Cambodians buyers in Sydney and Melbourne, beside those coming to Australia in the mid to late 1970s predominantly after the fall of Khmer Rouge regime, are parents with children studying in the country. As Australia if renowned for offering world-class education, this has drawn in a significant number of international students. At present, there are close to 2,000 Cambodians attending Australian high schools and universities. With this number continuously increasing, sooner or later it will becomes the key driver for property demand in Australia and this will continue to feed a stream of new buyers into the market every year.
Although these purchasers are parents buying properties for their children’s use, property requirements are not always dictated by their children. For the parent, they also want and need a property in Australia where they can typically spend time at the property as a second home or holiday home. Owning their own home can seem like a great idea, especially when they’re on vacation in Australia. But before they buy, it’s important to look at the hard realities of owning a home in a foreign country if they also want to use it as an investment property.
For any investors, the key requirements for most purchasers include proximity to mass transit stations, or being in a good neighborhood which offers a range of amenities including cafes, restaurants, supermarkets, and shops. Property along the mass transit station lines will not only benefit from improved accessibility, but also capital growth, and for those who prefer to live in the suburban areas, they also prefer the option of having a car park.
Investing for capital gains means the investor should look to growth suburbs for options. In recent years, due to rapid house price growth combined with the increase in housing supply, gross rental yields have tumbled to record lows in Sydney and Melbourne.
Gross rental yields for houses now in Sydney sit at just 2.8 percent and 3.8 percent for units. In Melbourne the house yield is 2.7 percent and 4 percent for units. By always investing with rental yield in mind, investors will not overspend on a property that won’t have great returns.
Generally, the preference for buyers is to purchase in new developments. Buying new property is less hassle for renovations and more ease in maintenance. Many new projects have been successfully marketed here in Phnom Penh, particularly properties from Melbourne. For example, ‘Avant’ located along 54-64 A’Beckett Street close to the RMIT University. The choice of new developments has increased over the past few years in different pockets of areas closer to downtown Sydney and Melbourne.
High-rise apartments are in particular demand by international students but need to meet buyers’ prerequisites. The location itself must be a mere 2 to 5-minute walk from the station and a short distance away from any of the leading restaurants, luxury fashion outlets, top universities and theatres. On top of that, the apartment building should offer a combination of design and unique features. For parents buying a property in Australia, it needs to serve the purpose of providing accommodation for their children during their education years, but also their lifestyle needs. It is wise to buy in an area that will be popular among tenants for the years to come.
With the Australian dollar at a very low level, there has never been a better time for buyers to move forward on their buying decision. Investors should always consider all the options, not settle for something cheap and never make a purely ‘emotional’ buy. Irrespective of budget, it is important to choose locations that will offer long-term investments; just because the location is very popular, it doesn’t mean it will necessarily provide the best return on investment.
As an investor, buying smart means ending up with better capital growth over time and higher growth in rental yields.
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