Australian Capital City Property Development,Foreign Investment and Investor Attitudes

Recently there has been a substantial change in the role of foreign investment in urban property development in Australia. Now, about 50% of foreign investment each year is directed to urban property sectors, with Asian investors accounting for approaching 50% of this investment. This trend has coincided with the re-emergence of the property development sector from the trough of a recession in the early 1970s to something approaching a boom in the last two to three years. While there are considerable variations in the performance and prospects of the various capital city property markets, Australia is seen in general terms as being a favourable place for foreign investment in urban property development, particularly as a destination for long term equity investment. This paper examines recent trends in capital city property markets in Australia, and in particular the increasing importance of foreign investors. It also discusses the results of a national survey of property developers, investors and intermediaries, and investors, both local and foreign, and reports on their attitudes towards the various capital city property markets, and their investment behaviours. Attitudes towards the Foreign Investment Review Board (FIRB) guidelines and controls are examined, and it is suggested that there is room for further substantial deregulation to encourage direct foreign investment in Australian urban property development.