Expat investors take advantage of falling Australian dollar

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Expat investors take advantage of falling Australian dollar

With the falling Australian dollar, property investment back home has become an extremely attractive proposition for expats working overseas, with many taking the plunge.

According to nationally based property investment advisory service, Performance Property Advisory* (PPA), over the past 18 months its expat client base has grown by 300 per cent.

Says PPA Director Acquisitions, David McMillan: “While local house prices have risen steadily in Sydney and Melbourne over the past two years, when priced in US dollars, pounds and euro, adjusted housing costs have not risen at all in real terms for expats. Now with the latest fall in the Aussie dollar – bringing it into the very low 80s against the USD – this has more than offset any price rises for those living abroad being paid in major world currencies.

“In fact, expats have not seen Aussie housing this affordable since the GFC when the AUD hit $0.625 against the USD in late 2008.”

PPA now has around 50 expat investors on its books and is fully expecting that number to double within 12 months given the very high level of inquiries.

These investors are located in Hong Kong (the biggest concentration), NY, London, Shanghai, India and the Middle East. They are primarily time-poor professionals, interested in high quality, high growth established investment properties that are easy to rent and attract good tenants.

They typically work in the finance and banking sectors, have high disposable incomes and are looking to hedge their bets on currency movements.

Mr McMillan says while expat investors are generally savvy investors there are many who are falling prey to off-the-plan purchases.

“Currently the only real estate companies on the ground in the bulk of Aussie expats hubs are project marketing companies selling over-priced off-the-plan Australian property to overseas markets.

“Sadly the fallout from this type of investment – which generally involves apartments in high-rise towers – is that these properties have little to no growth potential over the medium term and can be difficult to rent out, given the current glut of apartments in cities like Melbourne and now increasingly Brisbane.”

Mr McMillan estimates that off-the-plan agents working out of Asia pocket up to $40,000-$60,000 in commissions per purchase.

PPA is looking to “bridge the property investment knowledge gap” by running investment seminars for expats living in the Middle East, pockets of Asia and the US. These seminars aim to educate would-be investors about market conditions and the best approach to property investment in Australia.

Mr McMillan says that while expat investment in property in Australia is still relatively low, he anticipates it will grow considerably over the next few years as expats take advantage of the falling dollar.

He says that effective investing and property portfolio management for expats is no different to that for people living in Australia, particularly if their affairs are being managed by a specialist property investment advisory company, such as PPA.

“We source and purchase property on their behalf, manage it, regularly review it and in some cases, recommend disposal of under-performing assets.

“Unlike your traditional property managers, we also ensure properties are inspected four times a year, builders conduct a maintenance report every two or three years – frequency of inspection that should put the minds of any concerned expat investor at rest.”

 

*More about PPA …. The nationally based advisory firm is dedicated to helping time-poor professionals, business owners and entrepreneurs develop and manage high-performance residential property portfolios. PPA is a member of Property Investment Professionals Australia (PIPA) whose focus is on creating an ethical industry. David is a board member.

 

 

Case studies

Jacklyn Chu

Jacklyn has been living in London since early 2014.

She has been working for one of Australia’s major banks, working in infrastructure debt financing, since graduating with a double degree from the University of Melbourne. As a young professional, the overseas posting was a great opportunity to broaden her professional and life experience.

Although she intends returning to Australia within the next few years, she was eager to enter the property investment market given the potential for long term capital growth against the backdrop of low interest rates, net population growth and influx of overseas investors.

Although she felt more comfortable investing in blue chip stocks or managed funds, she wanted to diversify her investments between asset classes.

With the help of PPA she purchased her first investment property in Clayfield, an inner Brisbane suburb in 2014. It is a 1970s brick unit which is part of a block of six. It has good transport links to the city and airport and is very appealing to professionals and young families.

Given the success of her first investment which has appreciated in value by approximately 20% by independent valuation estimates, she is now looking at making acquisitions in London, Adelaide and Melbourne.

Asked if she had concerns about being an expat investor, she says she did at first, but recognised that being time-poor, she simply didn’t have the time to actively manage her investment even if she were based in Australia. She also recognised the value of outsourcing the property research, selection and ongoing management to a company like PPA.

As a comprehensive outsource property investment advisory service, PPA helped Jacklyn select and acquire her Brisbane property and is now involved in managing the property and reviewing its performance.

Says Jacklyn: “David McMillan came strongly recommended and during our initial video link conversation, I was able to articulate my financial goals and together we were able to broadly sculpt an investment mandate.

“David was subsequently able to provide me with ample research on the market, yield analysis for the shortlist of properties and manage the negotiation process. His knowledge, oversight and management of the process, were hugely beneficial, especially as a first time investor and being based overseas.

“PPA navigated me though the whole purchase process including connecting me with a conveyancer and a property manager.”

What message does Jacklyn have for other expats wanting to invest in property back in Australia?

“Don’t let your work posting dissuade you from your personal investment goals. With the weakening AUD, Australia is particularly attractive for expats.  If you don’t have time to do the ground work in between a full time job, travel and geographical separation, then a logical solution would be to outsource.”

 

Dean Boatman

Dean is currently living in Hong Kong where he has been living since 2000. He is working in the aviation industry.

Dean began his property investment journey is Australia in 2006, with the help of Phillip Almeida and David McMillan (now director of Performance Property Advisory), who managed the sourcing and acquisition process on his behalf.

Dean’s portfolio comprises three properties – an inner city Melbourne Victorian cottage, a solid brick house on a large block on the beach front, south of Melbourne CBD, and an inner city one-bedroomed unit in a Sydney beachfront suburb.

Since 2006, the increase in equity of his Australian property portfolio has been in excess of $450,000.

Dean has never had concerns about being an expatriate owning a portfolio in Australia given that management of his portfolio has been totally outsourced to PPA which takes care of sourcing suitable properties, procedures relating to purchases, advertising, letting and management – a complete service which makes living abroad and owning a property portfolio easy.

His message to other expats looking to invest in property back in Australia: “It’s a particularly good idea to purchase investment property with a falling Australian dollar. However, make sure that you have a property advisory company like PPA to advise and support you.”

 

This media release featured in the AFR story: http://www.afr.com/personal-finance/specialist-investments/forex/forexhappy-expats-help-fuel-australias-real-estate-market-20150721-gigvtb

 

More about ……. Performance Property Advisory is a nationally based property investment advisory service assisting mid to high income earners build and grow their property portfolio. Its focus is blue chip residential property and homes in Melbourne, Sydney and Brisbane. As a comprehensive outsource property investment advisory service, PPA selects and acquires property, manages property portfolios, reviews property’s performance and facilitates the sales process.

For more media information contact:
Wendy Parker PR on 0422 694 503