Australia is now the destination of choice for many investors.

Excellent Residential Buy-to-let Market

The world economic crisis has changed the face of property investment around the world. And whilst it has caused significant issues in some countries, it has also identified great opportunities for property investors.

Australia has ridden on the back of the emerging powerhouse economies, its location and mineral resources have positioned it well to deal with the economic crisis. Australia’s financial and banking regulation has provided a resilient platform in the face of the global economic crisis. The ‘big four’ Australian banks are emerging with leading credit ratings and are positioned to have a bigger impact on the world banking system.

Demand and Supply

Australia’s population is just over 20million and growing at about 1.7%pa through natural increases and a skilled immigration policy. Many booming mining and commodity processing regions have growth rates double this creating huge demand for housing.

The Housing Institute of Australia has independently assessed that Australia needs over 1 million new dwellings over the next five years to meet current demand. Rents in most capital cities and booming regions have increased markedly over the last two years as demand continues to rise and supply decreases.

Infrastructure

The amount of infrastructure spending by Federal government’s economic stimulus package is being matched and exceeded by private investment in a number of regions.

Gladstone local government area has projects started, committed and in feasibility worth A$42B. South Australia has over $20B in mineral exploration as reported by the Fraser Institute in Canada. Western Australia is coming out of the grip of a booming economy which was stimulated by the investment of A$5B in mineral exploration.

The Australian Government has undertaken to allocate $120 Billion to its Building Australia Fund. These funds will be used for critical infrastructure projects such as roads, rail, ports and airports to secure Australia’s economic future.

Economic Stability

Australia has a stable political system with good economic fundamentals in resource wealth. It has a highly skilled work force with few security issues. Australia has a foundation of English Law, uses the English language and the Torrens land titling system. The FIRB (Foreign Investment Review Board) has recently relaxed the rules for foreign investment in Australia creating an even more attractive environment.

Picking the Right Investment Property

Forrester Cohen has sought to provide International Investors and Advisors with accurate, credible and independently sourced property and due diligence information for every investment presented. It has made it a requirement that the Property Investors Association of Australia (PIAA) have each investment property rated via its 5 star rating system for investor and advisor confidence.

PIAA Rated Investments

To assist investors PIAA has developed a comprehensive system of information assessment called the PIAA 5 Star Rating System. This information, called due diligence is designed to enable investors to readily understand the quantity and quality of information provided by the developer for them to assess a potential property investment.

The information is assessed using a proprietary PIAA formula. This formula scores the range of information and weights it according to its significance in providing information to investors about the rated property. The rating system includes the assessment of over 200 topics of information to provide an investor or a property investment advisor an unprecedented level of confidence in selecting investment product.

Summary

What does this mean for property investment in Australia? The demand supply equation marked by an increasing imbalance in supply and sharp increase in rental returns coupled with lower interest rates has provided unprecedented property investment opportunities in Australia. Many properties now provide positive returns with capital gains exposure.

Australia is now being seen as the destination of choice for many investors.

Add to this the confidence gained from PIAA rated investments and the investment equation has just got a great deal simpler for Australia.