Development expert predicts flood of foreign investors in Melbourne to cause potential oversupply
Considering the axing of Canada’s wealthy investor immigration program, as well as the introduction of five new apartment towers in the CBD, accounting and advisory firm William Buck’s Neil Brennan is predicting that Melbourne is set to be the hotspot for foreign investment.
Pointing to the end of the Canadian Government’s scheme, which he noted many Chinese nationals had bought into, he said that wealthy investors would be looking to place their money elsewhere – and that Melbourne might just be the next spot for them.
The Canadian scheme saw applicants worth $1.6 million or more loaning the government $800,000 interest free for five years, allowing them to then apply for citizenship.
“The concentrated multi dwelling development opportunities that are available in Melbourne as result are perfectly suited to foreign investors with a large amount of freely available capital,” he said.
Part of the abundance of these multi-dwelling development opportunities is due to some builders meeting “continuous road blocks” when looking to develop in traditional Melbourne suburbs, pushing them towards higher density dwellings, said Brennan.
“The continued growth of neighborhood zoning combined with the time taken for many projects to receive approval is deterring smaller medium density development usually undertaken by builders on behalf of mum and dad investors,” he said.
“As a result the appetite to undertake a traditional sub division of an established block continues to diminish.”
With this in mind, he said that one of the impacts of a “potential flood of overseas investment” is that it could result in an apartment over-supply, and a possible undersupply of mid-level housing, as developers look to cater to this booming market segment.
Foreign investors, he said, are typically looking for the following types of property:
Inner city
Little or no maintenance
Highly tenantable