Real estate investors from China have invested heavily in Australian real estate in the past few years, especially in urban apartment buildings that are “similar to” the Chinese market. However, while the property market across Australia has generally risen sharply in the past few years, the market prices of apartment properties located around the CBD have gone in the opposite direction, drastically falling below the selling prices of new buildings, and investors are facing losses.
In the past few years, most of the newly-built apartment buildings in Melbourne and Sydney have been sold directly to Chinese-inhabited areas such as China and Singapore through overseas direct sales. Quite a few of these buyers have never even been to Australia and are not familiar with Australia's national conditions. They can only invest in the Australian market by relying on their own understanding of the domestic real estate market.
- Most Australian apartment buildings are concentrated in the urban CBD. Since areas outside Australia’s CBD usually restrict high-rise buildings, apartment buildings are mainly concentrated in the CBD area.
- The buying attention of the local Australians is still focused on the independent houses or joint houses that own the land. The main buyers of apartment buildings are from overseas.
- In the Melbourne CBD, 10200 apartments will be completed this year; the same number of apartment buildings will be completed in 2015, and as many as 2016 apartments will be listed in 13500.
- The Victorian government currently has 42 development applications for urban apartment buildings awaiting approval. These include 3630 apartments in Fishermans Bend and 1100 apartments in Spencer Street;
- A large number of "micro" apartments with an area of less than 30 square meters flood the market. Once the rental market is saturated, these small apartments will be difficult to sell;
Many apartment buildings purchased by overseas buyers are "high-priced houses":
Apartment buildings sold to overseas buyers usually cost far more than the market price of local real estate. Although the actual value of these apartment buildings also fluctuates upwards with the big market, it usually takes many years to wait for the actual value to rise to reach the purchase price.
Analyzing the current trading conditions of 10 high-rise apartment buildings around the CBD in the urban area, it is found that most of the selling prices are much lower than the buyers' investment prices. Buyers are facing losses.
- 买家在2010年以$577,200买入的位于Sturt Street一栋13层高层建筑中的一个单位，上月以$480,000售出，买家亏损$97,200；
- A buyer bought a unit i from Central Qquity's SouthbankOne apartment building in 2007, and sold it at a loss of $2012 during the low tide of 262,562, only recovering 53% of the investment;
- In the past ten years, only one of the 12 apartments sold by SouthbankOne was profitable for buyers. Dockland's apartment building faces a similar end;
- There are currently 2635 apartments in the Southbank area for sale, and 2238 apartments in the Dockland area are expected to be sold. A large number of unsold apartments make the prospect of the CBD apartment market bleak;
- Compared with the real estate on the fringe of the city, the real estate in the core area of the city center still recovers certain profits for investors.
The rental market is also under pressure:
Urban real estate is mainly purchased by investors, so a large number of rental apartments are listed on the market, putting pressure on the inner city rental market.
The Southbank area currently has a vacancy rate of 8.3%, ranking first in Victoria. One proprietor even offered free iPads to attract potential tenants.
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