Property Development Finance in Australia

1. Property Development Finance in Australia If you haven't seen a virtual stream of Asian money flowing into Australia, then you should start talking to people in the industry before you get involved. Asian money is changing the face of real estate development in the country due to its sheer volume and a very different mindset of Asian entrepreneurs compared to the way real estate development was previously done in Australia. The housing market appears to be the preferred target of Asian real estate builders. From what I understand, Asian small investors are looking for returns of more than the around 2% provided by their home market, which outperforms (say double) the Australian market. This makes selling residential real estate in Asian countries “easy”. I also understand that owning two investment properties in China can have significant tax consequences. I'm not a Chinese tax expert; I'm just repeating something I was told by an Asian developer. This means that there is no "problem" in carrying out large-scale development without stages, because they believe in the sale. It could also lead to an oversupply of housing in the local market if a sale is required in Australia.

2. An Asian businessman I know told me they resold the house and received the full sale value at the time to fund their construction. Australia's financial sector relies on real estate development! Bank financiers should carefully consider how to change their business practices to avoid being downgraded to providing only minor development financing that Asian real estate developers are not interested in. In many conversations with my network, I hear people say that Australia is a "safe haven" for Asian money. If so, this would explain why an Asian real estate developer might pay more than market price for a potential development site, or pay for a site upfront, rather than buying a site with an option agreement. It also had a major impact on Australia's traditional process of developing site 'control' before paying for it. This means that Australian developers have to compete in a market where sites are more expensive, buy direct rather than controlled, and where competitors don't have to jump over financier hoops. Let's summarize these basic issues: (a) Residential investments in Australia have yields about twice that of small Asian investors at home; (b) Tax issues in some Asian countries may make Australian investment cheaper; c) large-scale projects can be implemented without potentially flooding the housing market; (d) The pre-sale of apartments in Asia can make the full value of the property for sale available to the developer to implement the project, eliminating the need to work with financiers; e) The price of potential development sites increases; (f) Australian developers compete with developers who are not subject to the same restrictions as them. For more information about Property Development Finance and Construction Finance visit GCC. Contact us: Level 43 Governor Phillip Tower 1 Farrer Place, Sydney NSW Australia 2000

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