(First in a series)
On Feb. 5, an exclusive Philippine preview of Australia 108—Melbourne’s tallest building within the 5-kilometer radius of the Australian city’s top universities—was held at the newly reopened Archivo 1984 art gallery at 2135 Chino Roces Avenue, Makati.
Barry Plant International is a property agent which sells, among others, the Australia 108. Annie Lim, head of international business of Barry Plant, has claimed that the property would be a “wise overseas investment for Filipinos.” The buy-in, she added, which is just 10 percent of the total amount of the unit, or about P2 million, can be paid over the next four years.
Filipino investor Dominique Arcenas said she was interested in the property because “the down payments aren’t as high as what high-end condo units in the Philippines required, which was 30 percent over the entire construction phase.
Option to sell
“In Australia 108, an owner has an option to sell the unit in two years with the capital appreciation of 8 percent (not on the 10-percent buy-in but on the total quantum of the unit, which is Au$500,000, or about P17 million). So, if one computes 8 percent of Au$500,000 every year, it would be compounded to P1.7 million a year. The ROI (return on investment) within the next two years becomes 150 percent,” said Arcenas.
Arcenas likened the investment to buying an expensive piece of art. She pointed out that “a P2-million painting could fetch prices upward of P6 million after selling it in, say, about 10 years, but if one invests in Australia 108, the ROI would be more.
Arcenas added: “The biggest ‘export’ in Melbourne is the university belt. And that if one would look at the GDP, it’s mostly from schools, which would be the top MBAs and universities. A lot of people from Hong Kong, Singapore, Indonesia and Malaysia send their children to Melbourne to study because of the excellent quality of education there.”
She pointed out: “So, if one property development has a thousand units, the schools bring in about millions of students, most of them from well-to-do families. These students don’t need to buy an apartment there. They just need to rent. And Australia 108 is within a 5-km radius of all these top universities.”
A smart buy
At the preview in Archivo 1984 art gallery, two businessmen—a Filipino and a Singaporean—present agreed that Australia has always been a smart buy, especially in Melbourne. “It used to be Sydney, but it became too expensive,” they observed. Melbourne, they added, “would be a good risk.”
“The profits may not be as high, but it is safe. Investing in the Philippines, and in most other areas in Asia, entails higher risk but with higher returns,” they added.
Arcenas stressed: “This project is the first of its kind, and the focus of the event is to educate Filipinos regarding investment options,” said Arcenas.
“For Australia 108, the down payment is put in a trust that is completely refundable with interest if there should be a halt in the project. The money does not go straight to the developer,” she explained when asked if there were protective measures for Filipino investors when they do decide to invest.
Insofar as mechanisms for retrieval of investments should the investor change his or her mind are concerned, Arcenas explained: “If they change their minds, they can always sell the property. Property that is iconic has a very hot resale market.”
In a separate interview, Enrique M. Soriano III, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business Advisory, gave this advice to Filipinos intent on placing their investments overseas: “Just like any big-ticket purchase, the first step is not to rush in and buy the first property being offered.”
Soriano also stressed that a buyer should do his or her research.
“Find out who or what organization is behind the project, their track record in development, regulatory and ownership laws, including restrictions in real estate, exit provisions, rights of buyers, tax treatments and rights and obligations of foreign buyers,” he enumerated.
Investment-worthy
Soriano agreed that Melbourne is investment-worthy. “The city is more liveable than Sydney. The road system is better and remains to be the center for Australia’s manufacturing industry. Real estate is still cheaper by 30 percent than in Sydney,” he noted.
Soriano added that research groups collectively recognized Melbourne’s exceptional year in 2014, when prices grew by 11 percent.
“However, the rental yields paints a different picture. Melbourne registered the lowest property rental yields at a little more than 4 percent,” he said.
He added that overall, the city continues to deliver strong returns for investors as the primary drivers are the following: affordability, demand, high consumer confidence, and increasing migration figures.
When asked about low rental yields in Melbourne, Arcenas replied: “It depends which part of Melbourne. The Victoria area (where Australia 108 is located) where schools are the nearest, has had the highest rental yields in Melbourne.”
Arcenas urged readers to check out https://www.barryplant.com.au/about-barry-plant/ and https://www.australia108.com.au to know more about the development and its agent.