Australian property a safe bet for investors

Australian property a safe bet for investorsBritish uncertainty surrounding Brexit, looming elections in the United States and deteriorating bond yields are pushing investors towards Australia’s real estate market, says capital markets expert Andrew Mihno.Executive director of International and Capital Markets at the Property Council, Mihno says the Australian economy has outpaced the OECD’s average, and the local property market has achieved “stunning” returns as a result.”The predictability and transparency of Australia’s market, its strong economic fundamentals and regulatory framework, together with consistent supply and the government’s ongoing investment in infrastructure make it a safe bet for growth and returns,” Mihno explains.Statistics from JP Morgan find that Australian-listed REITs outperformed the global market by 60 per cent over the past five years.Mihno says a combination of domestic and global factors will bolster Australia’s favourable market conditions in the next few years, with the strength of the domestic economy and population growth driving ongoing demand for new and existing real estate. “Our economy has successfully transitioned from one reliant on mining and resources, to one with growing service and property sectors. This is fuelling demand for commercial property investment in Sydney and Melbourne,” Mihno says.”This transition mirrors the rise of the Chinese and Asian middle class and their increasing appetite for Australian healthcare, higher education, professional services and tourism.”Minho says global uncertainty – including the UK’s decision to leave the European Union and the current political climate in the United States – is driving increased interest in Australian real estate.”Increased investor risk aversion and a growing preference for assets with reliable and regular cash flows is encouraging investors to look towards other sophisticated markets like Australia,” he says.Significant regulatory reform has also helped Australia gain a greater share of global capital. “Australia has progressively liberalised its REIT rules to remove impractical investment restrictions.”Critically, the Australian Government has streamlined foreign investment rules for commercial investment, which now permit investment in commercial property up to $252 million in value without approval from the Foreign Investment Review Board. “This has freed up investment for office, industrial and commercial properties. It’s also enabled the REIT industry to remain nimble in an ever-changing market.”Australia’s future challenge is to keep pace with demand for new product to avoid further tightening of the market in an already competitive domestic environment,” Mihno concludes.