Not that long ago, Australia was seen as just a tad too far for wealthy real estate investors from the U.S. and Europe.
Not anymore. The country’s most populous city, Sydney, with a population of 5 million, is one of the world’s top 10 real estate destinations for ultra-high-net-worth individuals, defined as those with more than US$30 million to spend.
According to this year’s edition of Knight Frank’s annual Wealth Report, the Australian cities of Sydney, Melbourne and Perth are increasingly sought-after locales for this elite group, as well as for those with more than US$1 million to spend, thanks to affordability, safety and lifestyle.
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Sydney is at the top of the list for the highest net inflows of high-net-worth individuals globally, with the inflow representing growth of 4% of the population already based in the city, said Knight Frank Australia residential research director Michelle Ciesielski.
Known for its cosmopolitan culture and spectacular sunny weather, Christie’s Affiliate agent Ken Jacobs said Sydney is a rising global hotspot for prime property, with luxury homes in the harborside city selling on average for US$680 per square foot.
Melbourne comes in at second on the list globally with an annual net inflow of 3,000 high-net-worth individuals, or about 4% of the existing Melbourne high-net-worth population, according to Ms. Ciesielski. Perth sits at eighth on the list with a net inflow of 1000 high-net-worth individuals.
With the benefits seemingly outweighing the distance alone, it’s no longer considered too great a hurdle for many would-be buyers who appreciate how Australia ticks plenty of other house-hunting boxes. including exclusivity, privacy, size of homes and location.
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Comfort, a strong sense of law enforcement, transparent tax laws, stability and security all add a level of reassurance worth traveling for, say various global property analysts such as Knight Frank and Savills.
"Australia is increasingly well-positioned for the world’s wealthy as a good place to migrate and invest due to a number of factors, including lifestyle and relative security as high-net-worth individuals seek a safe haven from political upheaval," Ms. Ciesielski said.
About A$8 billion (US$6 billion) worth of new housing in New South Wales and Victoria is being sold to foreign nationals each year, according to the National Register of Foreign Ownership of Land Titles, equivalent to one-in-five new homes being completed across Australia’s two most populated states.
Australia’s three most expensive homes sold in the past two years have been to Foreign Investment Review Board-approved buyers including, most recently, the A$60.8 million (US$46 million) sale in February of luxury car importer Neville Crichton’s Point Piper mansion.
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Figures released by the Australian government's National Register of Foreign Ownership of Land Titles identify buyers from mainland China, Hong Kong, Macau and Taiwan as the most common, accounting for 80% of the properties sold to foreign buyers.
Register figures show foreign buyers spend an average of A$1.04 million (US$787,000) on an Australian property, with U.S. buyers the biggest spenders, purchasing property for an average of A$2.35 million (US$1.8 million).
Also helping attract foreign buyers is the fact that Australia’s luxury property market is still considered undervalued globally despite its double-digit growth in the past 12 months, and doubling in value in some cities since 2009.
Although housing affordability generally remains an issue for local Australian buyers, the country’s prestige market is valued well below the more-established markets, such as London, New York and Monaco.