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Investing In Melbourne Property

DisclaimerThis presentation is not to be considered legal or financial advice. The advice provided on this presentation is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.

Investing In Melbourne PropertyWhy Melbourne?About MelbourneFinanceTaxLegalVisasProperty ManagementThe Purchase Process

Why Melbourne?

Worlds most livable city 2011, 2012, 2013, 2014*HealthcareInfrastructureEducationSecurityCulture and EnvironmentSport*The Economist Intelligence Unit (EIU) Global Liveability Survey

TheEconomist Intelligence Unit(EIU) is an independent business within TheEconomist Groupproviding forecasting and advisory services through research and analysis, such as monthly country reports, five-year country economic forecasts, country risk service reports, and industry reports.[1]5

About Melbourne

Located in the state of VictoriaMost densely populated state in AustraliaSecond largest city in Australia (4.17 million people)Over 75% of the state live in Melbourne city66% of Melbourne is Australian-born

About MelbourneFastest growing area in Australia10.5% population increase from 2012-2013Districts surrounding Melbournes CBD grew by 15%Melbourne growing faster than Sydney over the past decadeOver 65,000 new permanent residents to Victoria a year (2011-2012)

The heart of Melbourne is growing faster than any other area in Australia, as strong population growth in inner cities across the country contrasts with dwindling numbers in regional areas.Australian Bureau of Statistics figureson population trends show the statistical division of Melbourne was the fastest growing area in the country in the year to June 2013, with numbers surging by 22.7% to 29,300. The districts surrounding Melbournes CBD also experienced rapid growth, with Docklands and Southbank both growing by 15% and North Melbourne growing by 6%. Slightly further afield, Abbotsford grew by 19%.

http://www.theguardian.com/world/2014/apr/07/melbournes-population-is-australias-fastest-growing-says-abs

http://www.immi.gov.au/media/publications/statistics/immigration-update/migration-australia-states-territories-2011-12.pdf

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Economy

Victoria has the second largest economy in AustraliaAccounts for 25% of the countrys GDPLargest income sectors are finance, insurance and propertyLargest single employer is manufacturingFastest growing sector is the service industry

Melbourne is Victoria's (and Australia's) most important industrial city, followed byGeelong.[citation needed]Additionally, energy production has aided industrial growth in theLatrobe Valley.[citation needed]Machinery and equipment manufacturing is the state's most valuable manufacturing activity, followed by food and beverage products, petrochemicals and chemicals.[citation needed]More than 15% of Victorian workers, are employed directly in manufacturing, the highest percentage in Australia.[citation needed]The state is marginally behind New South Wales in the total value of manufacturing output.[citation needed]

The service industries sector is the fastest growing component of the Victorian economy. It includes the wide range of activities generally classified as community, social and personal services; finances, insurance and property services, government services, transportation and communication, and wholesale and retail trade. Most service industries are located in Melbourne and the state's larger regional centres.

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EducationMelbourne University - oldest university in AustraliaMonash University largest enrolment of nearly 56,000 students30% of student population are International studentsOver 200,000 international students in Victoria

Historical Performance

Capital appreciation historical average over past 10 yearsApartments 7% per yearHouses 8% per yearRental yield 4-5.6+% depending on location and unit typeInformation openly available from the REIV (Real Estate Institute of Victoria)

Occupancy RateAmount of homes that are occupiedMelbournes average over 96% occupiedGood rental marketHigh number of owner occupiedKL luxury condominiums have occupancy rate of only 70% or less

Regulation

10% down payment held in a trustBy Australian regulation, this money cant be touched by the developerUpon settlement, this 10% is transferred to the bank with interest gained*70% of units must be sold before developers bank loan kicks in

Need notes on the 70% units sold, does this prove that the developer must prove in advance to the bank that they have enough financial reserves to carry out most of the project without needing the loan?14

FinancingLocal loans allow maximum of 70% financingAustralian dollar loans allow 80% financingAustralian banks cant discriminate on ageCurrent interest rate is the lowest for over 50 yearsAustralian dollar weakened with the Ringgit against the US DollarInterest only loans for up to 15 years

Tax Benefits For Foreigners

Depreciation of fixtures and fittings over 5 years, i.e. light fittings, blinds, cupboards, etc.Claim property inspection as tax deductibles (air ticket, accommodation, food, transport etc.)Borrowing expenses can be claimed as a tax deductibleUsed to offset your rental incomeAccrue tax credits if you eventually move to Australia

Stamp Duty SavingsState of Victoria has stamp duty incentives for buying new propertiesEncourage new developments in the stateStamp duty is proportional to construction completionOff-the-plan projects, stamp duty is on land value only

Fees

Body corporateSimilar to management fee in MalaysiaUsed to maintain the building or area that you live inPaid by the home ownerCouncil feesFees to offset public servicesWaste collection and disposal services for your neighborhoodMaintain parks and gardensRoads and planning

ConveyancingConveyancing is the process of transferring ownership of a legal title of land (property) from one person or entity to anotherE.g. from developer to purchaserConveyancers dont necessarily have to be lawyers but usually arePrepare, clarify and lodge legal documents e.g. contract of sale, memorandum of transfer Research the property and its certificate of title check for easements, type of title and any other information that needs addressing

Put the deposit money in a trust account Calculate the adjustment of rates and taxes Settle the property act on your behalf, advise you when the property is settled, contact your bank or financial institution on when final payments are being made Represent your interest with a vendor or their agent

Australian Visas

You dont need a visa to buy Australian propertyFIRB application is requiredBuying one property does not qualify you for a residencyBuying multiple properties to form a business may qualify for a business visa

Australian Visas

Foreigners must sell their property back to a residentChoose locations where locals want to stayForeigners can only buy new property, not sub salePermeant residents qualify for first home buyers grantPermanent residents can sell and buy property to anyone

Property Management

Advertise your property for rentShow your unit to potential tenantsShortlist and filter tenantsInspect your unit for defects upon receiving from the developerCollect rentalPay any fees from rentalOrganize for fixes on your unitTypically 7% of rental is charged as their fees

Professional property managers can take care of your investment property

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Reserve Lot & Booking FeeIssuance of Contract of SaleContract Signed10% Deposit PaidExchange of Contract of SalePre-Settlement & InspectionSettlementKeys Handed To ClientEngage Conveyancer If RequiredApply FIRB If RequiredApply For Loan If RequiredThe Purchase Process

The Purchase ProcessPurchaser pays booking feeWithin 7 days of paying booking fee:The Sales and Purchase Agreement (SPA) is signed and the 10% down payment is transferred to a trust accountLegal fees (if any) are paidApply FIRB if required3-6 months before the project is completed loan application process beginsPre-settlement and inspection of the propertyUpon settlement date the remainder down payment is collected (10-30% depending on loan margin financing) plus stamp duty and transferred over to the same trust account as mentioned aboveStamp duty is paid on top of the down payment amount and varies depending on size and location of the propertyThe loan can be settled externally by the client or with a mortgage house or partner banks both locally or overseas Keys are collected by purchaser or property manager

Thank YouFor more information on investing in Australian property, please contact William Lee at:William.lee@australproperty.com+6 018 2388 972