Melbourne’s eastern suburbs popular with Asian buyers

Asian buyers look set to increase their investments in Melbourne’s upper-middle-class eastern suburbs over the Chinese New Year period.

Popular suburbs include Glen Waverley and Balwyn, with a desire to own prestige property, feng shui alignment and access to better schools among the reasons why Asian buyers have bought homes recently.

The Ray White Glen Waverley office has recently sold a number of homes in the $2 million-plus price bracket to wealthy mainland Chinese buyers.

Director Damian Moore expects almost every property currently up for sale in the suburb to attract some interest from Asian buyers during the festive season.

“Glen Waverley has a very large Asian community with varying financial means.  Therefore we sell homes [to Asian buyers] from $400,000 to $2.5 million,” says Moore.

Moore says most of the suburb’s Asian buyers come from mainland China, Malaysia, Singapore and Indonesia.

“Often the grander the house, the better – financial status at the high end of our market is very important.

“But you can’t beat good old ‘feng shui’ – most buyers will consider direction of the home, adjacent streets, low side/high side, front door opposite back door, staircase facing the front door,” he explains.

About 14 kilometres west of Glen Waverley, the affluent suburb of Balwyn has also experienced an influx of Asian buyers wanting to own property in the Balwyn High School zone bounded by the Eastern Freeway and Whitehorse Road.

According to Tim Heavyside of Fletchers Real Estate, property purchases by aspirational Asian families have increased from an average of 20% of Balwyn home buyers in the zone 10 years ago to about 60% of all purchases currently.

"They may decide rather than invest $25,000 in school fees every year, I'll utilise that in travel and educate my child in life, but they still get the benefit of being at the fourth-best school in the state," he says.

According to Moore, selling to Asian buyers comes with its challenges.

“Most Asian buyers are very hard negotiators – they remain non-emotional about the purchase and must always feel in control,” he says.

Melbourne real estate is not just proving popular with Asian families – Asian companies are also entering the market.

Asian property developers are making major plays in the Melbourne apartment market, with Hong Kong-based Far East Consortium building 2,600 apartments in the billion-dollar Upper West Side project on Lonsdale Street. Investors in the project come from Malaysia, mainland China, Korea and India.

Savills reported late last year that investors and developers from China, Singapore and Malaysia had spent more than $100 million in buying Melbourne development sites in the past 18 months.

Last year Asian developers snapped up a 3,200-square-metre site at 224-250 La Trobe Street for $29.2 million with potential for more than 500 apartments while Singapore construction and property group Chip Eng Seng bought an 8,000-square-metre office building on a 900-square-metre block at 150 Queen Street for $25.5 million, with plans to convert it for residential use. Both deals were negotiated by Savills.

Another residential development site at 420 Spencer Street (2,250-square-metre site with a permit for 368 apartments) has registered interest from Asian buyers including SP Setia and Mammoth Empire Holdings, both from Malaysia, as well as private developers from mainland China.

In total more than half of the 17 properties sold by Savills since March last year with residential development potential were snapped up by Asian buyers.

According to Savills divisional director of CBD sales and investments Nick Peden, Asian developers have bought eight properties, averaging $12.5 million, since March 2010.

"Melbourne offers sustained population growth, inexpensive land compared to home markets, the potential for significant growth, the benefit of freehold title, and its stature as the world's most liveable city," says Peden.

In a recent report on the influx of Asian property developers, CBRE said Melbourne was proving more popular with foreign developers than Sydney due to larger sites being available on the northern edge of the city.

For more on Asian investment in Australian property, download our free eBook Foreign Investment in Australia's Property Markets.

 

 

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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