Push To Attract Foreign Investment To Boost Property Market

State and Federal governments need to do more to drive foreign investment in the national property market as the country navigates its way out of COVID-19 lockdowns, a leading Melbourne property developer says.

Tim Gurner said new Australian Bureau of Statistics data, released on Monday, painted a “dire” picture of the international student market, which would have knock-on effects for real estate.

ABS figures show overseas arrivals and departures in Australia in April were gravely low, prompting concern about the impact an almost 100% drop in international students would have on selling and renting in the residential market.

An almost 100% in international students is expected to have a “dire” impact city property markets like Melbourne. Picture: Getty.

Just 30 people arrived in Australia on international student visas this April, compared to 44,470 in April last year.

“This data is dire. You don’t need to be a genius to know a 100% drop is going to have a serious effect,” Mr Gurner said.

“The numbers are a scary reality to what everyone is seeing on the street in the key markets reliant on international students like the [Melbourne] CBD, Southbank and Docklands.

“From what we’re hearing, the CBD, City Road, all of the student centric areas are being hit very, very hard.

“Governments must act quickly to ensure this is fixed and we are again seen as a great, safe option for international students and investors.”

The ABS report found: “The outbreak of COVID-19, which started in China in December 2019, has continued to disrupt the movement of international students [in April], due to the introduction of travel restrictions from February 2020.”

“In 2019, China was the largest source country nationally. Educational exports are an important contributor to the Australian economy,” the report stated.

Gurner said if governments wanted to bring people back to the CBDs, they needed a return of international students, particularly the Chinese market.

“The Chinese market has very sophisticated buyers. They are not going to be mucked around by the Australian Government not supporting their students, not supporting what Melbourne has been to them for a long time – a great safe haven for education and their children. They could go to Canada, America, London. We’re shooting the golden goose.

“The Federal and State governments have to get more aggressive with stimulus for off-the-plan apartments. They must reduce or eliminate off-the-plan stamp duty for local and international investors.

“There is no motivation right now for anyone to buy off-the-plan as opposed to complete. There has to be an incentive there for investors and foreign investors to buy off the plan so we can stimulate construction.”

Last week, Prime Minister Scott Morrison announced international students would be allowed back into the country on a “pilot basis” from July, but only on “pre-approved plans” for particular institutions.

Nerida Conisbee, chief economist at realestate.com.au, said the Federal government’s green light for international students to return was a positive move, but predicted further falls for the May and June ABS data.

“Scott Morrison has announced that they could start to return as early as next month, but there are concerns that Chinese students won’t return in the same numbers regardless, given the directive from Beijing that they may be subject to racist attacks in Australia,” Ms Conisbee said.

“Last year, foreign students contributed almost $16 billion to the Australian economy. They also have a big impact on demand for apartments, both to buy and rent, close to universities.

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“The rental market in places like the Melbourne CBD, Carlton, Clayton in Melbourne and St Lucia in Brisbane have been particularly hard hit by fewer foreign students. This has flowed through to rental declines which has impacted investors.”

Swanston Street Carlton

Rental properties in student hubs like Carlton have been hit hard during the pandemic. Picture: realestate.com.au/rent

Georg Chmiel, executive chairman of international property listing portal Juwai, said the residential rental market had been affected by the lack of international students in the wake of the COVID-19 pandemic.

Mr Chmiel cited the Sydney suburb of Waterloo where 6936 international students lived last year. That number has dropped by 2,289, about a third.

“Assume that each of those missing students had been paying about $500 a week in rent last year. This year, Waterloo landlords are suffering from a shortfall in rental income of an estimated $5 million per month,” Mr Chmiel said.

“And Waterloo is just one of 17 suburbs where foreign students typically make up more than 10% of the population. The total rental shortfall that landlords are suffering must be several tens of million dollars per month.”

Mr Chmiel said it was likely Australia would capture more of the global study-abroad market post pandemic because fewer COVID-19 cases would make it more attractive.

“Australia normally hosts more than 625,000 foreign students per year, mostly from China and the rest of Asia… Australia competes for foreign students with Canada, the US, and the UK,” he said.

“In Australia, there have only been 628 COVID-19 cases per million people. That compares very favourably to the US and the UK, where there have been 4000 to 6000 cases per million.”

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