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Wednesday May 20th, 2015

Higher government taxes and tougher legislation are unlikely to deter the nouveau riche of Asia seeking to diversify their investment portfolios.

Residential real estate is increasingly a global commodity. In the end, market forces, not government regulations, will determine the level of foreign investment in Australia’s residential sector.

The choice of investment destination will be influenced only partly by financial considerations. For many, the driver goes far deeper than dollars and cents.

Sarah Nicholson, head of international project marketing Asia at CBRE, describes Asian investors as being “shock-proof” because they are used to their governments bringing down successive rounds of cooling measures. What's more, Australia has a relatively lower purchase cost compared to other parts of the world.

Hong Kong-based Gavin Sung, head of international residential sales at Savills Asia Pacific, says people recognise that the Australian government needs to look after Australian buyers first -- and to ensure that foreign investment does not swamp domestic investment.

The irony is that the devaluation of the Australian dollar and the latest round of interest rate cuts have combined to make Australian real estate even more attractive.

“Over the course of the past 12 to 15 months, the Australian dollar has weakened significantly,” he says.

“This translates to a saving of about 20 per cent on the price of a property. And now, with the RBA cutting rates again, borrowing in Australia is even cheaper.”


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