Developers report surge in overseas inquiries as investors eye off potential bargains

Overseas interest in Australian property has surged with Chinese buyers already on the rebound from coronavirus.

Developers and agents are reporting a doubling of overseas inquiries for city apartments across Melbourne and Sydney in the wake of the Aussie dollar tumbling to a 17-year low in March.

At the uber-luxury Neue Grand, a 20-storey complex on St Kilda Road by developer Growland, inquiries have almost tripled in the past fortnight.

“In the past two weeks we have received approximately five inquiries each day and half of them are from overseas, compared to nine months ago when only one in five inquiries was from overseas,” said Ronald Chan, Growland chief executive.

“In China they are probably four to five months ahead of us and the government is switching off the lockdown for some cities, so people have started relaxing, they think it’s safe.

“Then they start looking and planning what they’re going to do in terms of investment for probably the next six or 12 months.

“Australia is definitely the top country they would pick in terms of future homes or investments.”

The Australian dollar dipped to a low of US57.41 cents and the Reserve Bank of Australia cut interest rates to an unprecedented 0.25 per cent last month. Both factors have motivated overseas buyers to eye off potential bargains Down Under.

“It’s as though they are getting a discounted price,” said Prisca Edwards, from Sydney-based developer Crown Group.

“Anecdotally we are hearing this from multiple sources – one Singaporean buyer said it was now 14 per cent cheaper for them to buy a property in Australia due to the current exchange rate.

“They are striking now while the iron is hot because they see an opportunity to make capital gains in the long-term, with a good purchase price now.”

Despite new data from the Australian Bureau of Statistics showing building approvals rose by 3.9 per cent in the three months to February 2020, home building is widely expected to slow as the COVID-19 crisis takes hold.

So overseas interest is particularly focused on off-the-plan projects that have already started construction, says Melbourne’s Brett Griffith from Colliers.

“They’re looking at projects that are under construction and that are at the initial stages as well, because what’s happening is there’s not many projects launching in this climate,” he said.

“Once we get over this, the real estate market at the upper end, the apartment end, will be very strong because there’s going to be no supply coming through for quite a while.”

Figures from Chinese property portal Juwai show Chinese buying inquiries for Aussie real estate fell in February, but came back with a 12.7 per cent increase in March.

“China is getting back to normal, and that’s especially true of the Chinese who are wealthy enough to purchase overseas property,” said Georg Chmiel, Juwai executive chairman.

“Even though much of the rest of the world is still locked down, it’s easy for them to foresee a time when travel will again be possible.”

Low interest rates were part of the attraction, Chmiel said.

“While the big four banks are no longer lending much money to offshore buyers, some non-bank entities are doing so,” he said.

“Non-bank lenders charge a higher rate of interest than a local buyer might pay, and to have rates dropping lower makes their loans more affordable.”