Affordable properties in Aussie blue chip areas doing well

KUALA LUMPUR (June 21): Despite the softening Australian property market in the past 12 months — particularly for properties priced over A$1 million (RM3.22 million) — affordable stock in blue chip areas is still performing well.

"There tends to be a two-tiered market, where affordable stock is performing well due to government incentives that encourages home ownership and investment; lack of supply; the declining stock market; affordability; and rising construction cost that will drive up replacement cost of future projects," said Monument Project Marketing co-founder and CEO John Meagher.

Meagher, who also co-founder/CEO of Monument sister company 360 Property Group, was in Kuala Lumpur to launch the 23-unit boutique luxury residential Bellini Apartments development in Melbourne. The launch would be held simultaneously in Kuala Lumpur and Penang on Saturday and Sunday. Monument is partnering CBD Properties Sdn Bhd for this project.

Meagher noted that residences in blue chip areas located close to universities, and lifestyle precincts with good infrastructure and transport links continue to do well because of the massive disparity between supply and demand.

"Smaller low impact developments with fewer numbers of units and less commoditised product with a point of difference in both architectural design and amenity are attracting premium yields. They continue to hold good prospects for capital growth in the medium to long term future," said Meagher.

Meagher puts the average rental yield about 5% and the historical capital appreciation in Australia is between 7% and 10%, meaning properties will double in price every seven to 10 years.

The Australian economy is solid, says Meagher, and the consumer led economy resulted in a surprising 4.3% jump in gross domestic product for the year up to March. To put the growth into perspective, Meagher adds that the European union grew 1%, the US at 2%, Japan at 2.6% and the UK declined by 0.1%.

"Given all the fundamentals, we believe this will ensure us in good stead for strong capital growth gains and continued yield growth over the medium to long term," said Meagher.

360 Property Group has sold over 15,000 apartments in Australia.