Capital Idea – Why Sydney has made it into the top 5 Asia Pacific cities for Real Estate investment

Around 2011, when it can be safely said the worst of the global financial crisis ended. Australia, in stark contrast to many other nations, emerged comparatively unscathed.  With one of the world’s strongest property markets and a stable economy, it naturally became both a tempting foreign investment target and a sound addition to local investors investment portfolios.

Fast forward six years and Australia and in particular, Sydney has consolidated this reputation, becoming one of the most desirable investment hubs in the Asia-Pacific region.

In October 2017, CBRE identified in a report that there was a strong correlation between the size of a city’s investment stock and the volume of investment into that city.  In the Asia Pacific region, Tokyo, Seoul and Osaka are followed by Sydney as the top cities for real estate investment relative to size.  This means the greater Sydney area is punching well above its weight when it comes to competing for the global investment dollar.

To best understand Sydney’s unique attraction for investors it pays to consider the myriad of advantages which have come together to make it such lucrative investment option and strategies the average Australian can use to benefit from this windfall.

Business and commercial centre

Michael Fenton, JLL’s Managing Director, New South Wales said. “Sydney’s technology sector is as an asset for investment in commercial real estate markets.”

This attractive drawcard means higher business and commercial investment which translates to a stronger economy. In turn, higher demand for both commercial and private real estate.

Local markets are experiencing a ‘funnelling in’ of the world’s wealth. This has resulted in a case of ‘the more you entice, the more you attract.

Liveability

Investors have identified Sydney as having a wealth of positive lifestyle factors compared to its competition including:

• Comparative affordability against other Asia-Pacific cities and value for money
• Temperate climate
• Clean beaches
• Relaxed lifestyle
• High wages and standard of living
• No overcrowding
• Cleaner air

Infrastructure and amenities

Sydney is currently experiencing an infrastructure boom.  The government has recognised the need to support housing development by expanding road and transport systems and decentralising services. Road and light-rail projects are helping commuters travel faster and with greater comfort to the city and surrounds.

Land size

Compared to many Asian countries the average land size per capita in Australia is large.  China for example averages around 137.74 people per square kilometre whilst Australia averages a mere 2.66.

Interest Rates

For Australians, the recent run of historically low-interest rates has allowed more investors to enter the property market.

There is a debate throughout the industry as to whether interest rates will rise in 2018 but the general consensus is if they do rise it will not be markedly.

Local Logic

For the average Australian, outer-suburban and rural areas are benefitting from this investor interest. Many areas are now giving inner Sydney a run for its money. Many semi-rural towns experiencing price growth in the double digits at a time when the city market has slowed.

If you are an investor or have been watching from the sidelines —the time is now. Most builders a range of affordable house and land packages in strategic locations with strong infrastructure and bright prospects for both short and long term returns.