Amidst Singapore’s sluggish residential market, many property developers here have been venturing into Australia in the past 12 months to reap more profits, according to CIMB and reported in the media.
The country is also a good place to redeploy capital as it offers higher returns, added Century 21 Singapore.
“If you could team up with a good builder, or joint-venture with a good developer and control your cost well, Australia still has better margins than Singapore,” said its Chief Executive Officer Ku Swee Yong.
It’s possible for property developers there to generate a 20 percent return on investment (ROI) per annum, but in Singapore “I don’t think you can achieve even 15 percent”, he noted.
Aside from big property players like City Developments and Frasers Centrepoint, some smaller developers are also eyeing Australia’s greener pastures.
For instance, boutique developer Heeton Holdings will build a mixed-use project in Brisbane’s Fortitude Valley with the help of Australian firms Sunfire Asset and Twin Ocean Property, as well as SGX-listed companies KSH Holdings and Lian Beng Group.
Comprising 198 hotel rooms and 324 apartments, the AUD$150 million development is expected to be ready by 2017.
Moreover, the country’s appeal as an investment destination was further boosted by the weaker Australian dollar, added CIMB. Besides the local demand, its housing market is also capable of tapping a much larger pool of foreign developers.
Century 21’s Ku agrees, saying: “They (developers) can also decide to launch it in Singapore, instead of just selling it into the domestic market. For an Australian product, you can bring it out of Singapore, to Hong Kong, Taiwan, China and there will be buyers. So your market reach in terms of distribution and sales would be much wider.”
Other pull factors include a stable economic forecast and Australia’s status as the world’s third most transparent property market after the UK and the US based on a JLL index.
Romesh Navaratnarajah, Singapore Editor of PropertyGuru Group, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg
