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Malaysian investors increasingl...

Malaysian investors increasingly buying into Australian property market

Malaysian property investors are increasingly buying into the Australian property market, taking advantage of the property boom down under to get their hands on some coveted assets.

Investors from the Asia-Pacific (APAC) region are capitalising on the drop in demand for commercial properties in Australia, as well as the moderate rental yields that they are guaranteed if the market remains in its current state, to snap up prime buildings in key locations such as Sydney and Melbourne.

Altogether, Malaysian investors have contributed billions of dollars to the Australian property market over the past two years alone, with fellow APAC country China also investing heavily down under.

For example, the Malaysian Employees Provident Fund recently purchased a 49 per cent stake in Yarra Park City Pty Ltd, a company that owns the rights to a Melbourne-based mixed-use development for RM9 billion for RM514 million.

As a result, Malaysian property investors look set to make a significant profit on this deal, particularly if market conditions remain in their current state and they are in a position to charge competitive rents for use of this space. A preview for the office building is set to be held in the coming months.

Speaking to the Malaysian Reserve, Sarkunan Subramaniam, Malaysia managing director at Knight Frank, commented: "Grade-A offices overseas, especially in Melbourne, provide better yields compared to similar offices in Malaysia.

"It just makes sense for local companies to leverage on these gains while the properties there command a high asset value."

Meanwhile, the recent Metro Office Research and Forecast Report from the Colliers International Group, which focuses on 2017 to date, showed that rents in the Melbourne and Sydney commercial markets are "growing at an unprecedented rate".

Malaysian investors are therefore keeping this in mind when closing deals in the Australian market, with the hope that they will be able to make more money over the long term if rents continue to rise.

All information provided is of a general nature only and does not take into account your personal financial circumstances or objectives. Before making a decision on the basis of this material, you need to consider, with or without the assistance of a financial adviser, whether the material is appropriate in light of your individual needs and circumstances. This information does not constitute a recommendation to invest in or take out any of the products or services provided by SMATS Services (Australia) Pty Ltd or Australasian Taxation Services Pty Ltd.

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