Investing down under
Prestige real estate in Australia continued to attract the interest of foreign investors in 2012
Australia is at the top of the list when it comes to the countries in the world that are experiencing a booming real estate market. It is the sixth-largest country in the world by land mass. It hosts a comparatively small population and real estate properties are concentrated in the highly-urbanized areas at the east of the continent. It boasts a remarkable abundance of very diverse natural resources – such as reserves of coal, gold, iron, copper, natural gas and renewable energy sources – that attract foreign investments. Despite this, not only its major cities such as Sydney, Melbourne and Perth are experiencing a big growth in their property market, but also some more rural areas are reporting a surprising development.
Europe has been severely affected by a deep economic instability; Australia, instead, continued to be chosen by international buyers for their investments during the 2012 financial year. The luxury segment was characterized by a considerable rise in prices: they increased by 0.3% in Sydney, by 0,4% in Brisbane, by 0.6% in Adelaide and by 4.4% in Perth, but the biggest surge was reported in Darwin, where prices increased by 8.2%. Melbourne, instead, experienced a 2.3% drop.
Despite the increasing interest of international buyers, the Australian real estate market keeps being complicated due to the differences of purchasing processes. Property purchases in Australia are regulated by the Foreign Investment Review Board (FIRB), a governmental body that imposes restrictions on the types of property non-residents can buy. Would-be buyers that are not permanent residents of Australia must obtain the permission from the Australian FIRB before purchasing a real estate property; therefore, if a potential buyer intends to purchase a residential property or an investment real estate, he or she should initiate the approval process with the FIRB at least ninety days prior to starting the search of a real estate property in Australia.
Once this approval has been obtained, the process of complying with the legal requirements needed to buy and own a real estate property in Australia is surprisingly simplistic: the prospective buyer makes an initial offer to the seller verbally or in writing. The seller can accept or reject the offer and make a counteroffer. When the offer – or counteroffer – is accepted, a Contract for Sale will be drafted and the owner will be obliged to make a holding deposit amounting to 10% of the total price agreed. At this stage, if the seller backs out of the transaction, the buyer is entitled to a refund of the entire holding deposit. The deposit made by the buyer is usually irrevocable, but in some Australian states there is a ten day “cooling off period” following the execution of the contract for sale. In this case, there may be some financial penalty to backing out the deal, but the majority of the initial deposit will be refunded.
To conclude, it is worth pointing out that, in Australia, the purchase of new dwellings has risen by 3%, the purchase of established dwellings has increased by 0.5% and the construction of new dwellings, instead, has fallen by 0.3% in 2012.
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