Australia Property

Falling $A gives offshore investors more to spend
Larry Schlesinger
470 words
11 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

The weakening Australian dollar is mainly a positive and should encourage more institutional investment in ­Australian commercial real estate, say economists.

Since September, the Aussie has fallen from 94¢ against the US dollar to under 87¢ – a 7 per cent decline.

It has also declined by similar amounts against the Singapore dollar and Chinese yuan, and by lesser amounts against the British pound, the euro and ­Canadian dollar, the key offshore investor markets.

Logically, the weaker Aussie gives overseas investors a higher allocation of ­Australian dollars to spend on office ­towers, development sites, malls, hotels and warehouses. For local superannuation funds, a weaker Aussie makes overseas acquisitions more expensive.

However, economists told The ­Australian Financial Review most of the impact would be indirect with a weaker Aussie helping to strengthen the ­services-led economies of NSW and ­Victoria and speeding up investment in ­sectors such as tourism and higher ­education.

" A lower dollar supports the growth of the east coast economies. From an ­investor's perspective, it gives them more certainty and decreases the risk," said Stephen McNabb, CBRE head of research.

Stronger economic growth will generate demand for services and in turn drive up demand for things such as office space as businesses expand, he added.

AMP Capital Investors chief ­economist Shane Oliver said as the ­Aussie fell towards US80¢, investors would view it as nearer fair value and a sign the economy had rebalanced away from mining.

"Many Asian investors have their home currency tied to the US dollar, so their purchasing power has gone up.

"They will start to think they can buy into the market much more cheaply and also get the yield pick-up. Over time it will be a positive. It will only add to demand for commercial property," Dr Oliver said.

James Kaufman, director of sales and investments at JLL, said investors choose Australian commercial property for yield, stability and the transparency of the market relative to other Asian markets such as China.

"Nothing has changed in that regard to make Australia a less attractive market," he said.

There could be some negative impacts Mr Kaufman said. Those were rising hedging costs due to the volatility in the dollar, and that those offshore investors already invested in Australia would get less rental income flowing back to them.

"But these do not seem to be impacting on institutional investors at present," he said.

BIS Shrapnel chief economist Frank Gelber said the falling dollar would have the biggest impact on the domestic ­economy and was "tremendous" for trade-exposed industries.

"The lower dollar will stimulate those industries that need investment. It brings the process forward," he said.

Dr Gelber tipped the dollar to fall over the next three years to between US70¢ and US75¢.


Fairfax Media Management Pty Limited

Document AFNR000020141110eabb00019

(10-11-2014, 11:30 AM)greengiraffe Wrote: $A drop attracts Chinese property buyers
PUBLISHED: 0 HOUR 25 MINUTE AGO | UPDATE: 0 HOUR 0 MINUTE AGO

$A drop attracts Chinese property buyers
Many Chinese buyers are capitalising on foreign currency moves to buy higher quality apartments than what they originally set out to buy, CBRE project marketing director Peter Li said. Photo: Arsineh Houspian
SAMANTHA HUTCHINSON
Investors drive home lending growth
Apartment approval run slows

The sliding Aussie dollar has triggered a new wave of interest from Chinese property buyers, with the recent 9 per cent fall in the currency making Australian property up to one-third cheaper.

Compass Global Markets chief executive officer Andrew Su said in recent weeks he has received higher levels of inquiry from Chinese clients looking to make foreign exchange transactions in a bid to buy property.

“For many of these overseas buyers, currency moves in the past six months have made home purchases about one-third cheaper,” he said.

“And it’s not like property here is cheap, so it makes a significant difference to their buying plans.”

Around 18 months ago, Mr Su reported an element of “urgency” in the currency conversion plans of Chinese buyers which has eased during the year, as a fluctuating currency made buyers more choosy about when they wanted to make the exchange.

But a near 9 per cent slide in the Australian currency since the middle of September has again ratcheted up a sense of immediacy in the forward buying plans for a number of investors, Mr Su said.

“They’re in touch, and they tell me property is looking a lot more affordable now.”

The Australian dollar has weakened almost 9 per cent against the US dollar since September as the US economy strengthens.

The Aussie dollar sank to a four and a half year low in early November, almost touching US85.5¢. On Monday, it was trading stronger at US86.7¢.

Many Chinese are capitalising on foreign currency moves to buy higher quality apartments than what they originally set out to buy, CBRE project marketing director Peter Li said.

“I think the number of people in the market will stay the same, but they can now afford a higher-end product,” Mr Li said. “Before they were looking at homes that cost around $600,000, but now we’re getting more demand for homes and apartments that start around $2 million.”

Overseas purchasers buying property in the past three months have been particularly fortunate with their timing, Mr Li said, because the currency has fallen faster than prices have appreciated.

“If you’re looking at currency movements, apartments are actually a lot cheaper this year than they were last year,” he said.

Dealers at foreign exchange group OzForex have observed similar trends, according to chief currency and payment strategist Jim Vrondas.

“People wanting to bring money in for offshore have been waiting for the right time to bring it here, and for the exchange rate to get better has allowed people to pay more for property,” Mr Vrondas said.

“They’re picking up an extra five per cent on the exchange rate, and its another five per cent to spend on a property.”

Property transactions account for the bulk of the foreign exchange deals OzForex makes every day. In Australia, the group’s turnover on property-related transactions is six times the size of the second-most popular reason.

Melbourne-based agent Jock Langley believes the latest currency movements have been more influential in stoking demand from expats looking to return to Australia than for Chinese buyers looking for a first home.

Mr Langley heads up Abercromby’s, a boutique agency dealing in prestige property in and around Melbourne’s eastern suburbs or Toorak and Hawthorn and bayside areas, including Brighton and Sandringham.

Expats now make up more than 25 per cent of Abercromby’s client book, which is a 15 per cent increase in the past three months, Mr Langley said.

Chinese buyers account for around 10 per cent of the transactions made by the group, a figure that has been stable for the past 12 months.

“When it comes to Chinese buyers, I wouldn’t say there has been any rapid increase, its just a growing presence in the market that started more than 12 months ago,” Mr Langley said.

“But to be sure, the latest falls have helped them a lot. And the free trade agreement will also help, because it will expedite the transaction process from these really long-winded deals that can longer than the usual 60-day settlement.”

The Australian Financial Review

(15-11-2014, 05:54 PM)greengiraffe Wrote: Falling $A gives offshore investors more to spend
Larry Schlesinger
470 words
11 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

The weakening Australian dollar is mainly a positive and should encourage more institutional investment in ­Australian commercial real estate, say economists.

Since September, the Aussie has fallen from 94¢ against the US dollar to under 87¢ – a 7 per cent decline.

It has also declined by similar amounts against the Singapore dollar and Chinese yuan, and by lesser amounts against the British pound, the euro and ­Canadian dollar, the key offshore investor markets.

Logically, the weaker Aussie gives overseas investors a higher allocation of ­Australian dollars to spend on office ­towers, development sites, malls, hotels and warehouses. For local superannuation funds, a weaker Aussie makes overseas acquisitions more expensive.

However, economists told The ­Australian Financial Review most of the impact would be indirect with a weaker Aussie helping to strengthen the ­services-led economies of NSW and ­Victoria and speeding up investment in ­sectors such as tourism and higher ­education.

" A lower dollar supports the growth of the east coast economies. From an ­investor's perspective, it gives them more certainty and decreases the risk," said Stephen McNabb, CBRE head of research.

Stronger economic growth will generate demand for services and in turn drive up demand for things such as office space as businesses expand, he added.

AMP Capital Investors chief ­economist Shane Oliver said as the ­Aussie fell towards US80¢, investors would view it as nearer fair value and a sign the economy had rebalanced away from mining.

"Many Asian investors have their home currency tied to the US dollar, so their purchasing power has gone up.

"They will start to think they can buy into the market much more cheaply and also get the yield pick-up. Over time it will be a positive. It will only add to demand for commercial property," Dr Oliver said.

James Kaufman, director of sales and investments at JLL, said investors choose Australian commercial property for yield, stability and the transparency of the market relative to other Asian markets such as China.

"Nothing has changed in that regard to make Australia a less attractive market," he said.

There could be some negative impacts Mr Kaufman said. Those were rising hedging costs due to the volatility in the dollar, and that those offshore investors already invested in Australia would get less rental income flowing back to them.

"But these do not seem to be impacting on institutional investors at present," he said.

BIS Shrapnel chief economist Frank Gelber said the falling dollar would have the biggest impact on the domestic ­economy and was "tremendous" for trade-exposed industries.

"The lower dollar will stimulate those industries that need investment. It brings the process forward," he said.

Dr Gelber tipped the dollar to fall over the next three years to between US70¢ and US75¢.


Fairfax Media Management Pty Limited

Document AFNR000020141110eabb00019

(10-11-2014, 11:30 AM)greengiraffe Wrote: $A drop attracts Chinese property buyers
PUBLISHED: 0 HOUR 25 MINUTE AGO | UPDATE: 0 HOUR 0 MINUTE AGO

$A drop attracts Chinese property buyers
Many Chinese buyers are capitalising on foreign currency moves to buy higher quality apartments than what they originally set out to buy, CBRE project marketing director Peter Li said. Photo: Arsineh Houspian
SAMANTHA HUTCHINSON
Investors drive home lending growth
Apartment approval run slows

The sliding Aussie dollar has triggered a new wave of interest from Chinese property buyers, with the recent 9 per cent fall in the currency making Australian property up to one-third cheaper.

Compass Global Markets chief executive officer Andrew Su said in recent weeks he has received higher levels of inquiry from Chinese clients looking to make foreign exchange transactions in a bid to buy property.

“For many of these overseas buyers, currency moves in the past six months have made home purchases about one-third cheaper,” he said.

“And it’s not like property here is cheap, so it makes a significant difference to their buying plans.”

Around 18 months ago, Mr Su reported an element of “urgency” in the currency conversion plans of Chinese buyers which has eased during the year, as a fluctuating currency made buyers more choosy about when they wanted to make the exchange.

But a near 9 per cent slide in the Australian currency since the middle of September has again ratcheted up a sense of immediacy in the forward buying plans for a number of investors, Mr Su said.

“They’re in touch, and they tell me property is looking a lot more affordable now.”

The Australian dollar has weakened almost 9 per cent against the US dollar since September as the US economy strengthens.

The Aussie dollar sank to a four and a half year low in early November, almost touching US85.5¢. On Monday, it was trading stronger at US86.7¢.

Many Chinese are capitalising on foreign currency moves to buy higher quality apartments than what they originally set out to buy, CBRE project marketing director Peter Li said.

“I think the number of people in the market will stay the same, but they can now afford a higher-end product,” Mr Li said. “Before they were looking at homes that cost around $600,000, but now we’re getting more demand for homes and apartments that start around $2 million.”

Overseas purchasers buying property in the past three months have been particularly fortunate with their timing, Mr Li said, because the currency has fallen faster than prices have appreciated.

“If you’re looking at currency movements, apartments are actually a lot cheaper this year than they were last year,” he said.

Dealers at foreign exchange group OzForex have observed similar trends, according to chief currency and payment strategist Jim Vrondas.

“People wanting to bring money in for offshore have been waiting for the right time to bring it here, and for the exchange rate to get better has allowed people to pay more for property,” Mr Vrondas said.

“They’re picking up an extra five per cent on the exchange rate, and its another five per cent to spend on a property.”

Property transactions account for the bulk of the foreign exchange deals OzForex makes every day. In Australia, the group’s turnover on property-related transactions is six times the size of the second-most popular reason.

Melbourne-based agent Jock Langley believes the latest currency movements have been more influential in stoking demand from expats looking to return to Australia than for Chinese buyers looking for a first home.

Mr Langley heads up Abercromby’s, a boutique agency dealing in prestige property in and around Melbourne’s eastern suburbs or Toorak and Hawthorn and bayside areas, including Brighton and Sandringham.

Expats now make up more than 25 per cent of Abercromby’s client book, which is a 15 per cent increase in the past three months, Mr Langley said.

Chinese buyers account for around 10 per cent of the transactions made by the group, a figure that has been stable for the past 12 months.

“When it comes to Chinese buyers, I wouldn’t say there has been any rapid increase, its just a growing presence in the market that started more than 12 months ago,” Mr Langley said.

“But to be sure, the latest falls have helped them a lot. And the free trade agreement will also help, because it will expedite the transaction process from these really long-winded deals that can longer than the usual 60-day settlement.”

The Australian Financial Review

This falling $A makes me assured that more years of growth is still pending in Australia. Although it makes aussie's life tougher, but at least it creates jobs for many, thus soften the blow from their mining industry.

For all that we know the so called "recession" has already passed us, ie: QE issues etc. The next deep correction might be started by some black swan event.

All this can just be a good opportunity for fellow buddies to keep ploughing our pieces of investment land bank.

History already clearly shows. Falling commodities = falling aud = recession . simple as that. No one wants to invest in a falling currency.


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(16-11-2014, 06:22 AM)BlueKelah Wrote: History already clearly shows. Falling commodities = falling aud = recession . simple as that. No one wants to invest in a falling currency.


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Thanks buddy, investing can be of different perspectives for individuals. Judging from the swarms of companies that goes to down under to buy up properties. One might thought it's the only place on earth as a safe haven to stash away.

Falling currency = better valuation? If they are so confident of the future prospects. Buy low, sell high. Or buy high, sell higher?

Correct me if I am wrong, care to shed some light on this current frantic buying up of aussie's property? is the local bloke confident of the future prospects?

(16-11-2014, 07:11 AM)Belg Wrote:

(16-11-2014, 06:22 AM)BlueKelah Wrote: History already clearly shows. Falling commodities = falling aud = recession . simple as that. No one wants to invest in a falling currency.


via tapatalk

Thanks buddy, investing can be of different perspectives for individuals. Judging from the swarms of companies that goes to down under to buy up properties. One might thought it's the only place on earth as a safe haven to stash away.

Falling currency = better valuation? If they are so confident of the future prospects. Buy low, sell high. Or buy high, sell higher?

Correct me if I am wrong, care to shed some light on this current frantic buying up of aussie's property? is the local bloke confident of the future prospects?

Selected local blokes are... largely the able and capable... foreigners / migrants are... including the middle upper Chinese that are afraid of the new regime, looking for better quality environment in terms of health, education and work-life balances, companies that are looking for new growth area where home country markets are literally stalled.

If I m not wrong BlueKelah is residing down under and could be waiting to buy...

Anyway, from the news and some feedback, it doesn't appear that the growth in asset prices are running away like in Asia since Australia is so huge in land mess and for sure there are plenty of choices for everyone with a certain budget and hence affordability. Not to forget where you can't buy, you can always rent and renting is a big way of life down under as well...

No Vested Interests
Keen Observer

(16-11-2014, 08:12 AM)greengiraffe Wrote:

(16-11-2014, 07:11 AM)Belg Wrote:

(16-11-2014, 06:22 AM)BlueKelah Wrote: History already clearly shows. Falling commodities = falling aud = recession . simple as that. No one wants to invest in a falling currency.


via tapatalk

Thanks buddy, investing can be of different perspectives for individuals. Judging from the swarms of companies that goes to down under to buy up properties. One might thought it's the only place on earth as a safe haven to stash away.

Falling currency = better valuation? If they are so confident of the future prospects. Buy low, sell high. Or buy high, sell higher?

Correct me if I am wrong, care to shed some light on this current frantic buying up of aussie's property? is the local bloke confident of the future prospects?

Selected local blokes are... largely the able and capable... foreigners / migrants are... including the middle upper Chinese that are afraid of the new regime, looking for better quality environment in terms of health, education and work-life balances, companies that are looking for new growth area where home country markets are literally stalled.

If I m not wrong BlueKelah is residing down under and could be waiting to buy...

Anyway, from the news and some feedback, it doesn't appear that the growth in asset prices are running away like in Asia since Australia is so huge in land mess and for sure there are plenty of choices for everyone with a certain budget and hence affordability. Not to forget where you can't buy, you can always rent and renting is a big way of life down under as well...

No Vested Interests
Keen Observer

Thanks buddy, in terms of land and also operating in a well regulated environment, Australia offers a good place for industrial property investment - Judging from the postings.

I agree rental still plays a big part for the local blokes and it might not change as long as it's affordable.

(16-11-2014, 06:22 AM)BlueKelah Wrote: History already clearly shows. Falling commodities = falling aud = recession . simple as that. No one wants to invest in a falling currency.


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And falling interest rates.. similar to UK?

(16-11-2014, 10:35 AM)newbie11 Wrote:

(16-11-2014, 06:22 AM)BlueKelah Wrote: History already clearly shows. Falling commodities = falling aud = recession . simple as that. No one wants to invest in a falling currency.


via tapatalk

And falling interest rates.. similar to UK?

US, NZ are the only economies stand ready to raise interest rates as all remains unwell with other economies and QE has proven to be the only feasible solution to global woes so far...

(16-11-2014, 06:22 AM)BlueKelah Wrote: History already clearly shows. Falling commodities = falling aud = recession . simple as that. No one wants to invest in a falling currency.


via tapatalk

So, hostorically, in which year in the past did Australia go into recession as results of falling commodities prices and falling value of AUD ?

During the GFC in 2008/2009, commodity prices and AUD value were falling but Australia was not in recession - Why ?

How could AUD be ranked No:5 as most traded currency if no one wants to invest in it ?

Murray Inquiry will shed light soon and AU gov will have to decide on next step to take in December.

Belg : From the local property forum discussions, many prop investors are already slowly deleveraging by selling props, these are the experienced "experts" like dydx and mods here. However more investors still coming in droves as more and more % new mortgages are for investors vs owner-occupier.

Article below should shed some light on the precarious situation of AU Banking sector.

[Image: 225739-ad44e91c-2dcc-11e4-8424-141fab601c36.jpg]

Reserve Bank takes aim at mortgages

Noteworthy :
"the banking regulator this week revealed total assets had grown to $4 trillion — that is backed by just $207bn of capital."

"The big four already have to hold common-equity tier-one ratios of at least 8 per cent by 2016, which they claim is high and some like NAB and ANZ are under pressure to achieve given looming headwinds."
================================================================================================

Upcoming speech David Murray 1/12/2014

Ball likely to drop then.
==========================================

For your AU recession reading since you are questioning my post in detail - Boon - Mining Booms and the Australian Economy
Very long article but good reading. If history is any indicator at all, this time round post boom its worse - AUS has low inflation(means rest of economy is crap) and high AU dollar.

Economic History of Australia - you can find all the recessions here and the reasons contributing
===========================================================
NZ/SG/HK Govs all realise the risks involved and have done good job with cooling measures. Aus usually just bust spectacularly until the next mining boom comes around