Foreign developers have splashed more than $800 millon buying up plum Perth development sites in the past two years, new analysis by The Sunday Times reveals.
Talks of an oversupplied apartment and growing hotel vacancy rate has done little to curb the foreign spend.
Offshore developers have dropped more than $100 million on residential and commercial sites in the past two months alone.
And industry insiders expect the trend to continue into 2016, with foreign developers believed to be eyeing off new sites in Scarborough, South Perth and at Elizabeth Quay.
A Property Council confidence survey, released to The Sunday Times this week, showed foreign investment was one of the few areas where industry leaders predict positive growth in the next quarter. In the residential sector, industry members predict 13 per cent of sales to go to foreign buyers. Commercial figures predict 12 per cent of sales will be offshore.
Singaporean developers have been the major players with Fragrance Group, controlled by billionaire Koh Wee Meng, securing nearly $100 million worth of acquisitions in the city in the past 18 months.
Sales include the 2599sqm site hosting St Andrews Church on St Georges Tce, sold for $23.85 million in November.
Singapore’s biggest private developer, Far East Organisation, also bought the Luna Maxi Mart shopping centre, at the heart of the Scarborough beachfront redevelopment, for more than $64 million the same month. Chinese and Malaysian developers have also been active buying big sites in West Leederville, Victoria Park, Rivervale and South Perth.
And industry insiders say lots two and three at Elizabeth Quay, which are zoned for a mixed use residential/hotel development, will be bought by an Asian developer for as much as $90 million.
The Metropolitan Redevelopment Authority is understood to be creating a tender shortlist.
Jones Lang LaSalle director of sales and investments Sean Flynn negotiated the deals for both the Fragrance Group and Far East Organization sites. He said Singaporeans were quickly becoming the biggest offshore spenders.
“Traditionally we’ve had a close relationship due to the shared time zone. Many developers have received education or even holidayed here, they have a stronger understanding of our market than say the Chinese and know it tends to be quite robust,” Mr Flynn said.
“Even though there has been some negativity about the apartment market, the offshore developers realise that it’s still tiny compared to other states and has room to grow.”
Urbis WA director of economics and market research David Cresp said foreign developers only accounted for 13 per cent of active apartment projects selling in Perth but the number was growing. Curtin economics professor Steven Rowley said Perth development sites looked “cheap” to foreign buyers compared with Sydney and Melbourne.
“Overseas developers have different risk profiles and might be able to develop sites that local developers couldn’t get off the ground,” Dr Rowley said.
“Obviously we’ve had stories come out of Sydney where overseas developers have been building for Chinese buyers primarily… but I don’t think we’ll see that in Perth, as in our market they tend to develop for the broadest range of possible buyers,” he said.