Singapore money floods apartment market

Staff Reporter

Singaporean developers – who are currently responsible for almost 5,000 apartments presently planned or underway in Australia - are leading an Asian-led charge into the local residential market at levels not seen for more than two decades, a new report has found.

“Asian developers, predominantly from Singapore, are leading the pack, accounting for 92 per cent of all apartments presently being proposed or developed by foreign companies in Australia,” said CBRE executive director, global research and consulting, Kevin Stanley.

CBRE’s ViewPoint report found 58 per cent of the Singapore-backed developments are being facilitated by developer Frasers Property, and 65 per cent of these are part of the Central Park project in Sydney.

CBRE, a commercial real estate services firm, said the next most significant source of development capital is Hong Kong, with a single developer (Far East Consortium) behind 2,700 apartments in two Melbourne projects.

Beyond these two countries, Malaysia (12 per cent), China (nine per cent), Korea (nine per cent) and India (six per cent) make up the balance of what is a broad spread of Asian sources presently facilitating apartment projects in Australia.

CBRE said its report focused on the residential development sector, which has been heavily targeted by offshore groups – a trend which mirrors the current offshore push into commercial property investment in Australia.

CBRE said Asians were attracted to the Australian market for various reasons, including diversifying their risk; Australia is considered a market with steady, reliable demand; shifting equity to a “safe country”; dwelling starts are considered to be at a low point in the cycle in Australia; development site costs are relatively low in the pricing cycle; and the relative ease of doing property business.

The reports said foreign companies currently have over 13,000 apartments either planned or in the marketing/construction phase in 37 separate projects. Based on average apartment completions in Australia in 2011, this represents a market share as high as 32 per cent.

Mr Stanley said foreign developers had not been this active in Australia since the building boom of the late 1980’s/early 1990’s, when mostly Japanese companies were active in developing offices, shopping centres and hotels.

“The focus this cycle is on residential development and, by any measure, activity is at a significant level,” Mr Stanley said.

“This follows closely the present flows of Asian capital into the Australian commercial property sector. Year-to-date, Asian buyers have been responsible for 51 per cent of all foreign investment into commercial property and 19 per cent of all transaction activity in this country,” Mr Stanley said.

While Sydney and Melbourne remain the focus of this investment - accounting for 79 per cent of the total - foreign developers are facilitating apartments in a wide range of locations, including the Gold Coast (10 per cent of total), Brisbane (six per cent), Perth (three per cent) and Adelaide (two per cent), CBRE said.

“In a surprising result, Melbourne has a greater number of apartments proposed by foreign developers than Sydney, despite being a city with 450,000 fewer people,” Mr Stanley said.

“There’s likely to be a combination of reasons for this outcome; the long-term connection of Asian countries to Melbourne through education and tourism; the greater availability and lower relative price of sites and the city’s national reputation for the ease of doing property business, have all influenced this high share of foreign involvement in apartment developments in the southern capital.”

“We’re also aware of site purchases in regional areas of Australia close to mining centres, such as Mackay, where population and employment growth is very high, although to date there are no apartment numbers available for these projects.”

Staff Reporter

Singaporean developers – who are currently responsible for almost 5,000 apartments presently planned or underway in Australia - are leading an Asian-led charge into the local residential market at levels not seen for more than two decades, a new report has found.

“Asian developers, predominantly from Singapore, are leading the pack, accounting for 92 per cent of all apartments presently being proposed or developed by foreign companies in Australia,” said CBRE executive director, global research and consulting, Kevin Stanley.

CBRE’s ViewPoint report found 58 per cent of the Singapore-backed developments are being facilitated by developer Frasers Property, and 65 per cent of these are part of the Central Park project in Sydney.

CBRE, a commercial real estate services firm, said the next most significant source of development capital is Hong Kong, with a single developer (Far East Consortium) behind 2,700 apartments in two Melbourne projects.

Beyond these two countries, Malaysia (12 per cent), China (nine per cent), Korea (nine per cent) and India (six per cent) make up the balance of what is a broad spread of Asian sources presently facilitating apartment projects in Australia.

CBRE said its report focused on the residential development sector, which has been heavily targeted by offshore groups – a trend which mirrors the current offshore push into commercial property investment in Australia.

CBRE said Asians were attracted to the Australian market for various reasons, including diversifying their risk; Australia is considered a market with steady, reliable demand; shifting equity to a “safe country”; dwelling starts are considered to be at a low point in the cycle in Australia; development site costs are relatively low in the pricing cycle; and the relative ease of doing property business.

The reports said foreign companies currently have over 13,000 apartments either planned or in the marketing/construction phase in 37 separate projects. Based on average apartment completions in Australia in 2011, this represents a market share as high as 32 per cent.

Mr Stanley said foreign developers had not been this active in Australia since the building boom of the late 1980’s/early 1990’s, when mostly Japanese companies were active in developing offices, shopping centres and hotels.

“The focus this cycle is on residential development and, by any measure, activity is at a significant level,” Mr Stanley said.

“This follows closely the present flows of Asian capital into the Australian commercial property sector. Year-to-date, Asian buyers have been responsible for 51 per cent of all foreign investment into commercial property and 19 per cent of all transaction activity in this country,” Mr Stanley said.

While Sydney and Melbourne remain the focus of this investment - accounting for 79 per cent of the total - foreign developers are facilitating apartments in a wide range of locations, including the Gold Coast (10 per cent of total), Brisbane (six per cent), Perth (three per cent) and Adelaide (two per cent), CBRE said.

“In a surprising result, Melbourne has a greater number of apartments proposed by foreign developers than Sydney, despite being a city with 450,000 fewer people,” Mr Stanley said.

“There’s likely to be a combination of reasons for this outcome; the long-term connection of Asian countries to Melbourne through education and tourism; the greater availability and lower relative price of sites and the city’s national reputation for the ease of doing property business, have all influenced this high share of foreign involvement in apartment developments in the southern capital.”

“We’re also aware of site purchases in regional areas of Australia close to mining centres, such as Mackay, where population and employment growth is very high, although to date there are no apartment numbers available for these projects.”

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