28 Aug 2017

Doing Business in Australia: Australia's Real Estate environment

Nikki Robinson gives an update on Australia's Real Estate environment. 

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.

TRANSCRIPT

I work in the real estate sector and we're seeing a lot of interest coming in from Asia and particularly at the moment into the Australian real estate market. We think that this investment is being driven by the depreciating Australian dollar, the higher yields that are being generated from real estate assets in Australia and the low cost of debt here in Australia.

Really what we try and do is help them understand the way that transactions are going to be executed in Australia. So we're looking at a different legal market, a different way that taxation can be managed for these projects, and helping them navigate through those issues so that they feel comfortable.

The other thing that we try and do is help introduce them to and educate them about the key market players here in Australia, how the industry operates and, if necessary, introduce them to contacts we have here that will help them deliver on the outcomes that they're seeking in their investment profile.

When we're working with our international investor clients, especially ones that are new to Australia, we work through and sit with them alongside each step of the transaction to make sure they understand what that process is, in particular identifying where it may be different from the way that they are used to executing a transaction in their own jurisdiction.

An example of this would be where a client is acquiring an asset or a piece of land from a government entity where there are very strict procurement guidelines and processes which must be followed. Now this could be quite different from a jurisdiction in which they're used to operating in. So ensuring that they understand how that process works usually leads to a happy client and a successful outcome.

One of the things that we are seeing is that prices are being driven up by the great interest in real estate asset at the moment in Australia so some of our international clients are teaming up with domestic participants in the Australian market (and the term we use is capital partnering) to actually enhance their ability to acquire these assets at the inflated prices that we're seeing in the market at the moment.

Another thing that we are seeing and advising our clients on is the significantly increased government regulation for foreign investment acquisitions for real estate. This seems to be focused on particular asset classes and at the moment one of those areas is agricultural land, and ensuring that we are up to date and advising our clients on any such changes is very important to us.