Foreign Property Investors Benefit from Australian Dollar Drop

Overseas buyers who purchased off-the-plan Australian apartments when the local dollar was stronger are now reporting gains of up to 30%, according to property investment company IP Global.

The company, which helps investors from Hong Kong, Singapore, and the Middle East buy property in new apartment developments, has seen many of its clients profit financially from unhedged currency positions.

Elizabeth Chu, senior investment manager at IP Global, confirmed that investors who bought apartments in Australia over 18 months ago only paid a 10% deposit, and by the time the units were completed and the transactions due to settle, the purchase power of the buyers’ currencies had gone up.

Ms Chu said that currency has been a pivotal consideration when buying Australian properties. Investors secure their purchases with a 10% deposit and then settle the balance when the local currency decreases in value.

Wanting to diversify holdings as well as acquire assets in a lower price range, IP Global’s high net worth clients turned to Australia after purchasing in the United Kingdom and / or United States.  Many of them have already invested in Melbourne and Sydney real estate, and are now looking at Brisbane as a source of potential opportunities.

Ms Chu said that IP Global also has its eye on the Gold Coast, but she advises her clients to stick to locations where the economy appears to be sustainable and does not fluctuate. Describing Sydney as a “tough market” where the prices have skyrocketed, she admitted that her investors are still trying to get into the city’s real estate market.

IP Global, which normally buys large blocks of apartments off the developer and then sells them on to overseas investors, is currently eying Brisbane. Favoured locations include Newstead and the inner east suburban areas such as Cannon Hill.