HOT OPPORTUNITY SOUTH AUSTRALIA
A stable property market, tax reforms, a large supply of land for sale and a low dollar is making southern Australia a prime location for property investment, business experts say.
A major Australian city is in the midst of a huge public land sell off including prime harbourside sites and properties in inner-city suburbs.
The South Australian Government is offering the land across about 20 sites in its capital city, Adelaide, as it looks for ways to woo private investment to kick-start the ailing economy, replenish its coffers and halt rising unemployment.
Flinders University Business School Professor in Finance Sarath Delpachitra said there were substantial bargains to be made for foreign investors in South Australia compared to cities in the eastern states – particularly Melbourne and Sydney – where the property market was at its peak and would not make prolonged returns for property investors.
The economic issues such as the winding down of manufacturing in South Australia, the closing of power stations and a downturn in mining had created negative investor sentiments and acted as potential barriers to investment.
“It gives an indication that the state is struggling but that shouldn’t be the case for commercial and residential investors. This should be the best time for investment in South Australia because the normal theme is ‘buy at low and sell at high’ and we are going through a difficult period,” Prof Delpachitra said.
Advantage South Australia
“Despite a slowdown in the Chinese economy, there are signs of recovery in the mining sector and when that happens South Australia will be the real place to reap the benefits of investment compared to Victoria or New South Wales.”
Prof Delpachitra, who is also the managing editor of applied economics journal Australian Economic Papers said the low Australian dollar and the chance to invest in a stable market by global standards made South Australia a potentially high return state for foreign investors.
“The property prices on the eastern seaboard are hitting their peak but that’s not the case for South Australia where there are plenty of opportunities and bargains. If you look at the commercial building opportunities in Adelaide in terms of land availability they are massive opportunities compared to the major cities on the eastern seaboard.”
Prof Delpachitra said foreign investment in Australia was expected to increase by about AU$ 20 billion over the next four years. He said if South Australia could attract a quarter of that, it would help spark a development boom for the state’s economy.
“The problem we have at the moment is that property investment is focused on the eastern seaboard … there is not much publicity about the South Australian economy despite greater incentives for public-private partnerships and I don’t think overseas investors see real opportunities in South Australia but there are and this should be the right place to invest.”
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