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Shy Away from Apartments with Foreign Investors

property marketIn an article for the website Property update, Michael Yardney talks about the risk of investing in apartment properties that have a fair percentage of overseas owners. In fact, Yardney recommends owner-occupiers against buying in apartments that are dominated by investors.

Investors lack sentimental bond with a property

The line of reasoning is simple; investors do not have any sentiment attached to a property, for them it is just a part of their portfolio and so the moment they sense capital growth erosion or decline in rental yield, or the market sentiment turning turtle, they may just depart in masses, leaving a trail of low property values. This can hit the owner-occupiers very hard, asserts Yardney.

The question of foreign investors

Yardney feels that the problem is further compounded when the overseas investors are mixed in the investment recipe. These are people who are geographically far away and hardly keep up with the Body Corporate fees. Naturally, when the payments do not come from a fair number of them, the managing body of the strata units cannot help but compromise maintenance of buildings, thus starting a downward slide.

Overseas buyers are hard to chase

In case of payment defaults, the foreign investors are hardest to chase and in case of falling property prices, they are likely to lose interest, assuming that they might find it difficult to release even the equity from the lending banks. Such properties, in other words, report more foreclosures than the average, thus bringing disrepute. Another reason why owner-occupiers should stay away from them!

You can read the original article here.

Presently, the foreign property investors can only invest in new properties, regulations keeping them away from grabbing the established market pie. Free Trade agreement between us and China furthers the chances of future overseas investment in the property market. We are being seen as a safe haven; given our cultural standing, our economic stability, regulatory transparency and educational facility. In this light, it might get even more difficult to keep the foreign investors away from the apartment units in the inner CBD area.

How do you think the Chinese influence will grow in 2015 in the Australian real estate?