In this issue of Capital Business, Paul Preston, Director and Head of IP Global Middle East goes on a recce to Brisbane and Melbourne to discover its investment potential

The Australian property market has always been much sought after by the circa 16,000 Australian expats currently living in Dubai and Abu Dhabi. It offers a very strong investment case underpinned by limited supply, consistent population increases and an ever-increasing demand for quality housing. However most importantly, the market offers full ownership for foreign investors and Australian banks lend up to 80% of the property to foreign buyers along with favourable mortgage rates.

Brisbane, recently ranked number one fastest growing mature city in the world, has a population which is predicted to double over the next 40 years to just less than 8.5 Million. Brisbane is a much smaller city than Australia's other two major hubs - Sydney and Melbourne - therefore has a lot of growth potential. From a value perspective, there is little else to compare it to as the prices have not risen significantly in the last five years.

Brisbane has a diverse job market, therefore supporting the property market, positioning it perfectly to accelerate due to the under supply of quality properties. Fortitude Valley and the Gasworks precinct have been identified as having the most potential, and these locations are going through an enormous amount of regeneration with both private and government investment. Notable large corporates such as Bank of Queensland, Energex and Virgin Australia are moving into the neighbourhood creating thousands of jobs. The Newstead Towers site in the heart of this area is well situated to take advantage of this demand.

Melbourne has shown steady increases in property prices over the last few years and this is a trend set to continue. It has been ranked 'The World's Most Livable City' for the past three years and is renowned as the business, educational and recreational hub for the whole of Australia. It is immediately apparent upon arrival how much bigger and more spread out Melbourne is than Brisbane. Like any property market, certain locations appreciate more in capital values from others - it is important to view these properties while also paying attention to infrastructure, demographics and industry to see which location will perform best. There are certain areas like Docklands and the City areas which are to be considered with caution from an investment standpoint due to their oversupply and vacancy rate issues.

Currently, population growth in Melbourne is outpacing the supply of new residential properties coming into the market. This is a very strong driver indeed when making a decision whether to invest into a market or not. If demand is strong with a measured approach of new residential inventory coming into the market, the future will be bright for investors. Like any market, there are pockets which will outperform others in terms of ROI.

The 'Caulfield Heath' development is a new project that is ripe for significant ROI, overlooking the famous racecourse and built in an already established suburb. A stunning project, exceptionally well situated near to the train station, Monash University, and a stone's throw from the city. There are also 40 schools within an 8 mile radius of the site. Years from now, this project will stand out significantly in the locality as there is currently nothing like it.

Most of the new projects currently being sold in Melbourne are all off plan, with build times of around 1-2 years until completion. Something that stands out with these projects is the fact that developers legally can only take 10% of the property value from clients at the reservation stage and the remaining 90% when they hand you the keys on your finished property. This basically means that when you buy, you pay 10% of the property value, sit back for 1 or 2 years, watch the property go up in value, and then pay the final balance when the property is complete.

With 80% finance available for foreign nationals in Australia and promising returns, Down Under offers an optimal landscape for property investment.

About Paul Preston
Paul Preston is Director and Head of Middle East at IP Global. Before joining IP Global he was CEO at one of the largest Property Brokerage companies in the UAE. Paul has been investing into property since he was 17 and since then he has built up a strong and well diversified portfolio covering various countries around the globe. As Director and head of the Middle East for IP Global, Paul is currently in various regions around the GCC helping HNI's to build strong property portfolios as well as building relationships, laying foundations for the business's expansion.

© Capital Business 2014