RESIDENTIAL RESEARCH - Knight Frank

 
RESIDENTIAL RESEARCH - Knight Frank
RESIDENTIAL RESEARCH

  LIVING & STUDYING   BUYING PROPERTY   WHY INVEST?
RESIDENTIAL RESEARCH - Knight Frank
Contents
    1. Sydney—The global city
    page 2

    2. Living in Sydney
    page 4

    3. Studying in Sydney             A thriving global city is one that delivers
    page 7                            an outstanding lifestyle and attracts many
                                                                                       City Wealth Index
                                      visitors from around the world. Sydney           In the Knight Frank City Wealth Index
    4. Housing in Sydney                                                               2019, Sydney ranked 8th of the cities that
                                      continues to mature as a global city with
    page 10
                                      strong investment in infrastructure and a        matter to the ultra-wealthy.
    5. Renting in Sydney              push to increase density close to the city.
    page 11                           Sydney is now counted as a city that             Across the three categories, Sydney
                                      matters to the ultra-wealthy. This guide         performed best in the ‘investment’
    6. Buying in Sydney               focuses on living, studying and buying           category (6th) based on major property
    page 12                           residential property in Sydney.                  investments by private individuals or
                                                                                       family offices across both commercial
    7. Buying as a First Home Buyer                                                    and residential markets.
    page 13                           Liveability
                                      Sydney ranked in 5th place of the World’s
    8. Buying as a Foreign Investor
                                      Most Liveable Cities in 2018. This was up
    page 14
                                      from 11th place in 2017, according to the        The Knight Frank City Wealth
    9. Owning in Sydney               Economist Intelligence Unit, as shown in         Index 2019, Sydney
    page 19                           Table 1.                                         50 international cities ranked in each category

    10. Selling in Sydney             The index is based on 30 factors spread                                                 Ranking
    page 20                           across five areas: stability, infrastructure,
                                                                                       Wealth                                    27
                                      education, health care and environment.
    Feature:                                                                           Investment                                6
    10 reasons to invest in Sydney
    page 22                                                                            Lifestyle                                 16

                                                                                       OVERALL                                   8
                                      Most Liveable Cities 2018
                                      Index of 140 global cities based on Stability,
                                      Infrastructure, Education, Health Care
                                      & Environment

                                              1. Vienna, Austria

                                              2. Melbourne, Australia
                                                                                       The ‘lifestyle’ category also scored well
                                              3. Osaka, Japan                          (at 16th), taking in the elements of the
                                                                                       number and quality of universities,
                                              4. Calgary, Canada
                                                                                       security, as well as, the number of five-
                                              5. Sydney, Australia                     star hotels and the quantity and quality of
                                                                                       leading restaurants.
                                              6. Vancouver, Canada

                                             =7. Toronto, Canada                       Sydney came in 27th position in the third
                                                                                       category ‘wealth’. Using data from
                                             =7. Tokyo, Japan                          analyst GlobalData WealthInsight, the
                                              9. Copenhagen, Denmark                   current population of HNWI (those with
                                                                                       assets of more than US$1 million) and
                                             10. Adelaide, Australia                   UHNWI (those with net assets of over
                                                                                       US$30 million) residents were looked at
                                                                                       in each city, in addition to, analysing
                                                                                       recent growth performance.

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RESIDENTIAL RESEARCH - Knight Frank
FOCUS ON SYDNEY Q2 2019                                   RESEARCH

International                                          Many international and luxury clothing
                                                       brands and jewellery stores are well-
Visitors                                               established along Pitt Street Mall, George
                                                                                                         FAST FACTS
The harbour is home to some of                         Street, King Street and Castlereagh
Australia’s most iconic landmarks – the                Streets. Sydney also hosts a variety of           SYDNEY
Sydney Harbour Bridge, the Sydney                      markets throughout the year with a wide
Opera House and the Royal Botanic                      variety of fresh food, clothing, gift wares       •   Sydney is the state capital of
Gardens. International cruise ships are                with individual traders and established               New South Wales (NSW).
regularly docked including the Queen                   retail stores setting up pop-up shops.
                                                                                                         •   Australia’s largest capital city,
Mary II and Ovation of the Seas; boosting
                                                                                                             with approximately 5.1 million
tourists in and around The Rocks and                   The Rocks markets are iconic with the                 residents estimated living in the
Darling Harbour. Sydney’s famous                       cobblestone streets with great access to              Greater Sydney region in 2017.
beaches are within close proximity to the              the City and Harbour. Manly markets are
city including Bondi and Coogee whilst                 hosted amongst historic buildings with            •   Located on the East Coast,
Manly is a short ferry ride north.                     seaside backdrop.                                     and covers a geographic area
                                                                                                             of 12,350 sqm.

Sydney accommodates a vast array of                    The number of international visitors to           •   Slightly humid, hot summers
world renowned restaurants, art galleries,             New South Wales (NSW) grew 3.0%, to                   (mean maximum 26°C) and
independent fashion houses and vibrant                 4.4 million, in the year ending December              cool winters (mean average
retail strips. Prominent shopping centres,             2018. The most number of international                8°C).
such as Westfield Sydney and Westfield                 visitors came from China (772,000),
                                                                                                         •   Most daily sunshine is nine (9)
Bondi Junction act more as destinations                United States (495,000), New Zealand
                                                                                                             hours in the month of
than simply retail outlets—providing                   (441,000), United Kingdom (372,000) and               December.
entertainment and restaurants in addition              South Korea (205,000).
to the plethora of shops. Many arcades,                                                                  •   Sydney operates under the
often hidden in historic buildings, are                International visitors from China grew by             Australian Eastern Standard
scattered throughout Sydney. Both the                  17.7% in the year ending December                     Time (AEST) time zone from
                                                                                                             early April to early October
Queen Victoria Building and The Strand                 2018. The United States increased by
                                                                                                             each year and Australian
Arcade offer a mix of boutique shops for               11.3% and New Zealand decreased by                    Eastern Daylight Time (AEDT)
locals and tourists.                                   10.1% over the same time.                             at other times of the year.

                                                                                                         •   From Sydney, current average
                                                                                                             flying travel time is
                                                                                                             approximately eight (8) hours
                                                                                                             to Singapore and Jakarta, nine
                                                                                                             (9) hours to Hong Kong and
International Visitors to New South Wales, by Country of Residence                                           Kuala Lumpur, 10 hours to
Total number, year ending December 2018                                                                      Shanghai and 12 hours to
                                                                                                             Beijing.

          China                                                                                          •   Sydney is regarded as
            U.S                                                                                              Australia’s financial hub,
   New Zealand                                                                                               attracting professionals from
            U.K
 Other Countries
                                                                                                             Asia Pacific and around
    South Korea                                                                                              the globe.
          Japan
           India
     Hong Kong
       Germany
      Singapore
      Other Asia
   Other Europe
        Canada
         Taiwan
       Malaysia
      Indonesia
         France
     Philippines
    Scandinavia
            Italy
       Thailand
    Switzerland
    Netherlands
         Ireland

                    0   100,000   200,000   300,000   400,000   500,000   600,000   700,000   800,000

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RESIDENTIAL RESEARCH - Knight Frank
Sydney’s                                     Language
                                         Demographic                                  Other than English, Mandarin (4.7%) was
                                                                                      the most common language spoken in
    SYDNEY ANNUAL                        Profile                                      Sydney at the time of the Census 2016.
    EVENT CALENDAR                                                                    Other typical languages included Arabic
                                         Population                                   (4.0%), Cantonese (2.9%), Vietnamese
    JANUARY                              Population has been steadily rising in       (2.1%) and Greek (1.6%).
    •   Sydney Chinese New Year          Sydney with strong overseas migration
        Festival
                                         into the city. Over the year to 30 June
    •   Sydney Festival
    •   New Year’s Day Cricket Test      2017, an increase in the estimated           Education
    •   Australia Day Sydney             resident population was recorded at
        Celebrations                                                                  Sydney is a skilled city. A higher
                                         2.0% to 5.1 million. This is ahead of the
                                                                                      proportion of people are educated at
    FEBRUARY                             overall Australian population growth of
                                                                                      university level (28.3%) compared to the
    •   Tropfest Short Film Festival     1.6%. According to the Australian Bureau
    •   Sydney Gay and Lesbian Mardi                                                  Australian average (22.0%). In Sydney,
                                         of Statistics (ABS), the Sydney population
        Gras                                                                          19.2% of the local student population
                                         is projected to grow annually by a
    MARCH                                                                             were studying at university in the 2016
                                         minimum of 1.4%, to total 6.6 million
    •   Sydney Harbour Regatta                                                        Census, compared to the national
                                         persons by 2036.
    •   Australian Athletics                                                          average of 16.1%.
        Championship
    •   Sydney Design Week
    APRIL                                Age Distribution                             Work
    •   Sydney Royal Easter Show
                                         Residents are primarily in the younger
    •   Sydney Comedy Festival                                                        The most common occupation of
                                         age groups—with 37.6% of Sydney’s
    MAY                                                                               Sydney’s residents are in professional
                                         population aged between 20 and 44
    •   Vivid Sydney Light Festival                                                   services—at 26.3% compared to the
                                         years old, compared to the national
    •   Sydney Writer’s Festival                                                      22.2% national average. Clerical and
    •   Mercedes-Benz Fashion Week       average of 34.6% for this age group.
                                                                                      administrative workers (14.6%),
        Australia
                                                                                      managers (13.7%) and technicians and
    JUNE                                                                              trades workers (11.7%) were the next
    •   Sydney Film Festival             Multiculturalism                             most common occupations.
    •   Bondi Winter Magic
                                         Sydney is a true multicultural city, with
    JULY                                 42.9% of residents born outside of           Of all the employed people in Sydney,
    •   Parramatta Winterlight
                                         Australia. The most prominent countries      3.4% worked in hospitals. Other major
    AUGUST                               include China (4.7%), England (3.1%),        industries of employment included
    •   City2Surf
                                         India (2.7%), New Zealand (1.8%) and         computer system design and related
    •   Sydney International Boat Show
    •   Oxfam Trailwalker                Vietnam (1.7%).                              services (2.5%), cafés and restaurants
                                                                                      (2.5%), banking (2.5%) and supermarket
    SEPTEMBER
                                         In addition, approximately 49.4% of          and grocery stores (2.0%).
    •   Sydney Fringe Festival
    •   Cabramatta Moon Festival         Sydney’s resident’s parents were born
                                         overseas—compared to the national
    OCTOBER
    •   Sydney Night Noodle Markets      average of 34.3%. This wide diversity has    Travel to Work
    •   Sculptures by the Sea            encouraged many international
                                                                                      In Sydney at the time of the Census
    •   Manly Jazz Festival              restaurants, schools and cultural
    •   Everest Horse Race                                                            2016, the most common methods of
                                         activities established within communities.
                                                                                      travel to work for employed people were
    NOVEMBER
    •   Emirates Australian Open                                                      by car, as a driver (52.7%), train (10.9%)
                                                                                      and bus (5.5%). Other common
    DECEMBER                             Religion                                     responses were worked at home (4.4%)
    •   Carols in the Domain
    •   Sydney to Hobart Yacht Race      The most common religion affiliation in      and walked only (4.0%).
    •   Sydney New Year’s Eve            Sydney is Catholic with 25.1%, followed
        Fireworks                        closely by 24.6% with no religion stated.    On the day, 22.8% of employed people
                                         The Anglican religion was practiced by       used public transport (train, bus, ferry,
                                         12% of the Sydney population followed        tram/light rail) as at least one of their
                                         by Islam with 5.3%.                          methods of travel to work and 59.8%

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RESIDENTIAL RESEARCH - Knight Frank
FOCUS ON SYDNEY Q2 2019                           RESEARCH

used a car (either as driver or as          Leonards and Chatswood. Accessible by:       Industrial
passenger).                                 train, ferry, bus and car.                   Industrial areas are more spread across
                                                                                         the metropolitan area varying from
                                            Macquarie Park includes the suburbs of       distribution centres, to warehouses, and
Key Employment                              Macquarie Park and North Ryde. Workers
                                            are within close proximity of Macquarie
                                                                                         industrial estates. Mostly they are
                                                                                         accessible via bus, truck and car.
Hubs                                        University, the Macquarie University
The distribution of employment              Hospital and the Macquarie shopping          South: Banksmeadow, Port Botany,
opportunities are wide across Sydney,       centre. Accessible by: train, bus and car.   Rosebery, Enfield, Marrickville,
although there are key concentrated                                                      Kingsgrove, Airport.
areas for office and industrial workers.    Parramatta represents Sydney’s second
                                            CBD with a high concentration of             North: Artarmon, Mount Ku-Ring-Gai.
                                            government tenants including the NSW
Commercial                                  Law Courts. Accessible by: train, ferry,     Inner West: Chullora, Silverwater,
Sydney CBD is the largest office market     bus and car.                                 Rydalmere, Lidcombe, Regents Park.
in Sydney. It extends from Central
Station to Circular Quay, and across from   Suburban locations include Surry Hills,      Outer West: Yennora, Smithfield,
Barangaroo to Hyde Park. Accessible by:     Ultimo, Sydney Olympic Park, Burwood,        Wetherill Park, Greystanes, Eastern
train, light rail, ferry, bus and car.      Rhodes, Norwest, Mascot, Liverpool,          Creek, Erskine Park, Arndell Park,
                                            Bankstown, Penrith are accessible by         Huntingwood, Marsden Park.
North Shore accommodates the next           train, bus and car. Whilst those better
largest office market comprising the main   serviced by bus and car include Pyrmont,     South West: Moorebank, Prestons,
suburbs of North Sydney, Crows Nest/St      Lane Cove and Alexandria.                    Ingleburn, Minto and Smeaton Grange.

Sydney
Major infrastructure network

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RESIDENTIAL RESEARCH - Knight Frank
6
RESIDENTIAL RESEARCH - Knight Frank
FOCUS ON SYDNEY Q2 2019                              RESEARCH

Schools                                        Universities                                  single student visa regardless of their
                                                                                             chosen course of study and the Student
Schools in Australia generally comprise a      Most universities have a main campus          Guardian Visa—Subclass 590 where
mix of local and international students.       with several smaller campuses located         student guardians can apply for the new
The education system is broadly divided        across multiple states and territories; in    Student Guardian Visa.
into primary (aged 5-12) and secondary         CBD, metropolitan and regional areas.
(aged 13-18). There are two main types         This provides a wide range of options         All students and student guardians will
of public and private schools:                 when studying in Australia with many          generally be required to lodge their visa
                                               universities also setting up campuses         application online by creating an
                                               based in major international cities.          ImmiAccount.
Public Schools
Public schools are financially and
administratively operated by the State
Government and provide free education
                                               International
to domestic students. First preference is      Students
normally given to those living within a        Reflecting the strong reputation
particular catchment area from the             internationally, universities in NSW             APPLICATION
school. Student visa holders must pay a        accommodate a large international                PROCESS FOR
fixed fee for each year of education,          student base. International student
dependent on the type of visa held.
                                                                                                INTERNATIONAL
                                               enrolments in NSW increased 10.5%, to
                                               336,391, in 2018. Higher Education had
                                                                                                STUDENTS
Selective public schools are financially       the most demand in student enrolments
and administratively operated by the           with 143,673, while international
State Government. Selective public             enrolments in Schools represented a
                                                                                                TO SCHOOL
schools are regarded as more prestigious       total 6,387 students.                            Expression of interest form: must
due to the academic selective nature.                                                           be completed prior to the school
Students must sit academic examination         Across all education sectors, the largest        year in order to guarantee a
and excel in order to be offered a             group of international students have             position for the student.
position from the respective school.           enrolled in NSW are from China (96,500),
                                               Nepal (34,500), India (27,500), Brazil           Wait for offer: If all requirements
Additionally, these selective public           (20,700) and Thailand (15,800).                  are met, the school will offer a
schools do not usually limit their intake to                                                    formal placement in writing.
catchment areas. Due to their public           The application process for international
nature, student visa holders must pay a        students applying to Australian                  Apply for a Student Visa: With the
fee for each year of education.                universities is similar to local students.       formal school offer, students can
                                               The length of the application process can        then apply for the SSVF online.

Private Schools                                often be longer than local students, as
                                               more information is required before
Independent schools are financially and
                                               acceptance.
administratively privately operated.                                                            TO UNIVERSITY
Independent schools therefore hold more                                                         Apply directly online: through the
                                               Most universities will require an IELTS
control over the quantity and quality of                                                        university website and provide all
                                               (International English Language Testing
teachers, classroom sizes, amenities and                                                        required evidence. In most
                                               System) examination conducted, an
co-curricular activities. Fees for                                                              instances this is prior education,
                                               internationally recognised education
independent schools are usually high, but                                                       financial and English language
                                               qualification and a portfolio of previous
can be considered to provide an                                                                 competence.
                                               work experience where applicable.
investment for superior education and
amenities to students.                                                                          Wait for Offer: If all requirements
                                               The Simplified Student Visa                      are met, the university will offer a
Religion-based schools hold faith at the       Framework (SSVF)                                 formal placement in writing.
core of their education—however they           The Simplified Student Visa Framework
continue to follow the state government        (SSVF) is designed to make the process           Apply for a Student Visa: With the
education curriculum. These religion-          of applying for a student visa in Australia      formal university offer, students
based schools are usually non-                 simpler to navigate via two subclasses:          can then apply for SSVF online.
government, and thus often have higher
fees than government subsidised                Student Visa—Subclass 500 where
schools.                                       international students can apply for a

                                                                                                                                         7
RESIDENTIAL RESEARCH - Knight Frank
Private Schools for International Students, Sydney
Sample of private schools registered to accept international students, 2019

S ub ur b                       S chool                                       R elig ion           Gend er   Year Lev els

Aub ur n                        Sule College                                  Non-denominational   Co-ed              K-6
B ellev ue Hill                 Cranbrook School                              Anglican             Boys          pre-K-12
B ellev ue Hill                 The Scots College & Prep School               Presbyterian         Boys          pre-K-12
B elr os e                      Covenant Christian School                     Christian            Co-ed         pre-K-12
B ur wood                       MLC School                                    Uniting              Girls         pre-K-12
Chip p end ale                  Uniworld                                      Non-denominational   Co-ed            10-12
Collar oy                       Pittwater House School                        Non-denominational   Co-ed         pre-K-12
Cr emor ne                      Redlands                                      Church of England    Co-ed         pre-K-12
Cr oy d on                      Presbyterian Ladies College                   Presbyterian         Girls         pre-K-12
D ee Why                        St Luke's Grammar School                      Anglican             Co-ed         pre-K-12
D ulwich Hill                   St Maroun's College                           Catholic             Co-ed         pre-K-12
E d g ecliff                    Ascham School                                 Non-denominational   Girls         pre-K-12
For es tv ille                  Forestville Montessori School                 Montessori           Co-ed          pre-K-9
Gleb e Point                    St Scholastica's College                      Catholic             Girls             7-12
Gor d on                        Ravenswood                                    Uniting              Girls             K-12
Hur s tv ille                   St George Christian School                    Christian            Co-ed             K-12
Hur s tv ille                   Danebank School                               Anglican             Girls         pre-K-12
Kenthur s t                     Hills Grammar                                 Non-denominational   Co-ed            7-Dec
King s for d                    St Spyridon College                           Greek Orthodox       Co-ed         pre-K-12
M anly                          Stella Maris College                          Catholic             Girls             7-12
M ar oub r a                    The French School                             Non-denominational   Co-ed         pre-K-12
M id d le Cov e                 Glenaeon Rudolf Steiner School                Non-denominational   Co-ed         pre-K-12
M os man                        Church of England Preparatory                 Anglican             Boys           pre-K-6
M os man                        Queenwood School For Girls                    Non-denominational   Girls             K-12
Neutr al B ay                   SCECGS Redlands                               Church of England    Co-ed         pre-K-12
Newtown                         The Athena School                             Non-denominational   Co-ed         pre-K-10
Nor th B ond i                  Reddam House, North Bondi                     Non-denominational   Co-ed         pre-K-12
Nor th Par r amatta             Tara Anglican School for Girls                Anglican             Girls         Pre-K-12
Nor th S tr athfield            The McDonald College                          Non-denominational   Co-ed             3-12
Nor th S y d ney                Wenona School                                 Non-denominational   Girls             K-12
Nor th S y d ney                Shore, Sydney Church of England Grammar       Anglican             Boys          pre-K-12
Py mb le                        Pymble Ladies' College                        Uniting              Girls             K-12
R os e B ay                     Kambala                                       Anglican             Girls         pre-K-12
R os e B ay                     Kincoppal                                     Catholic             Co-ed         pre-K-12
R os ev ille                    Roseville College                             Anglican             Girls             K-12
S ans S ouci                    St George Christian School                    Christian            Co-ed              K-2
S outh B elmor e                All Saints Grammar                            Greek Orthodox       Co-ed         pre-K-12
S t I v es                      Masada College                                Jewish               Co-ed         pre-K-12
S tanmor e                      Newington College                             Uniting              Boys          pre-K-12
S tr athfield                   Meriden School                                Anglican             Girls         pre-K-12
S ummer Hill                    Trinity Grammar School                        Anglican             Boys          pre-K-12
S y d ney                       St Andrew's Cathedral School                  Anglican             Co-ed             K-12
S y d ney                       Macquarie Grammar School                      Secular              Co-ed             7-12
Ter r ey Hills                  Northern Beaches Christian School             Christian            Co-ed         pre-K-12
Ter r ey Hills                  German International School                   Non-denominational   Co-ed         pre-K-12
Ultimo                          International Grammar School                  Non-denominational   Co-ed         pre-K-12
Wahr oong a                     Knox Grammar School                           Uniting              Boys              K-12
Wahr oong a                     Abbotsleigh                                   Anglican             Girls         pre-K-12
Water loo                       Taylors College                               Non-denominational   Co-ed            10-12
Wav er ley                      St Catherine's School                         Anglican             Girls             K-12
Woollahr a                      Reddam House, Woollahra                       Non-denominational   Co-ed         pre-K-12

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RESIDENTIAL RESEARCH - Knight Frank
FOCUS ON SYDNEY Q2 2019                                                     RESEARCH

Universities, New South Wales
Universities accepting international students

                                                                                                                                                                Annual Average
                                                      World Australian                                           Number of              International
                                                                          Adjusted                                                                               International
University Name                                      Ranking Ranking                                            International          Students % of
                                                                       Graduate Salary                                                                           Student Fees
                                                      2017    2017                                                Students             Total Students

University of Sydney                                     78               12              $50,046                   13,000                     24%                    $38,000
University of New South Wales                           89                15              $50,424                   12,283                     24%                    $37,000
University of Technology, Sydney                        292               11              $47,548                    9,722                     26%                    $29,000
Macquarie University                                    273               19              $45,797                    8,790                     23%                    $33,000
University of Wollongong                                306                3              $52,120                   12,429                     41%                    $26,000
University of Newcastle                                 341                9              $49,629                    5,338                     16%                    $25,000
Western Sydney University                               510               35              $47,035                    4,537                     11%                    $24,000
University of New England                               732               14              $48,958                     933                       5%                    $20,000
Charles Sturt University                                779               30              $51,022                    6,847                     18%                    $22,000
Southern Cross University                              1,054              40              $47,728                    1,921                     14%                    $21,000

Definitions
World Ranking is calculated by averaging the ranking produced by QS World University Ranking, the Shanghai Academic Ranking of World Universities and Webometrics web publishing
rankings.
Australian Ranking is calculated from the combined score for World Ranking (reputation), Graduate Satisfaction (ratings) and Adjusted Graduate Salary (results).
Adjusted Graduate Salary is a measure of how well students are doing in the job market some months after graduating based on graduate salaries, rates of unemployment and the proportion
of students who go onto further study.
Annual International Student Fees are an estimate only. It is highly recommended to engage directly with the Australian university for information on the cours e and fees applicable.
Further information is available at univeristyreviews.com.au

                                                                                                                                                                                           9
RESIDENTIAL RESEARCH - Knight Frank
Many believe Australians still aspire to       mortgage. The remainder (34%) were
                                                                                        • Sydenham to Bankstown Urban
one day own the ‘Great Australian Dream’       being rented from a landlord.              Renewal Corridor
- a house standing on a ‘quarter acre
                                                                                        • Turrella
block’. Although times are changing.
                                                                                        • Wentworthville
With our fast-paced lives many are now
                                                                                        Precincts with planned public transport
opting for low maintenance living, with a
                                               Distribution of Tenure, Sydney           connections include:
high standard of amenity, as more people
become accustomed to the level of              % of private dwellings                   • Cherrybrook Station Precinct
service delivered when travelling, and                                                  • Greater Parramatta Growth Area
living in, high-density global cities around                                            • Sydney Metro Northwest Urban
                                                                                          Renewal Corridor
the world.
                                                                                        • Telopea Precinct

Dwelling Types                                                                          Precincts to provide businesses in the
                                                                                        region with land for industry and
Standalone houses (also known as                                                        employment include:
landed) do continue to be the most                                                      • Carter Street
dominant dwelling type in Sydney,                                                       • Frenchs Forest
representing 57% of all dwellings. This                                                 • Western Sydney Employment Area
trends lower than the national average of
                                                                                        • Western Sydney Aerotropolis
73% given the greater volume of higher
                                                                                        • Westmead
density properties. While semi-detached,
row or terrace houses and townhouses,                                                   Precincts to unlock land for future
with a compact backyard, comprised a                             RENTED
                                                                                        residential homes include:
                                                                 OWNED WITH MORTGAGE
14% share.                                                       OWNED OUTRIGHT
                                                                 NOT STATED
                                                                                        • Ingleside
                                                                 OTHER
                                                                                        • Marsden Park North
A little over 28% of dwellings are flats or
                                                                                        • North West Growth Area
apartments – compared to the national
                                                                                        • North Wilton & Wilton
average of 13%. This reflects Sydney’s
ongoing urban consolidation over the
                                                                                        • Rhodes East
past decade, as well as, the increasing                                                 • Schofields Town Centre
use across the metropolitan area for                                                    • South West Growth Area
public parklands and shared facilities.                                                 • Vineyard
                                                                                        • West Schofields

Ownership                                      Growth precincts
In Australia, most residential dwellings
                                               The NSW government has identified key
                                               locations across Sydney suitable for
                                                                                        Prime properties
are purchased as freehold property, that       rejuvenation with new homes and jobs.    Prime properties, considered the top 5%
is, the land and building are owned                                                     of the residential market by value, are
outright, in perpetuity, under the Torrens     Precincts with good access to existing   mostly located close to, or dotted
Title system.                                  public transport connections include:    around, Sydney Harbour. Well-respected
                                                                                        private schools in these suburbs attract
                                               • Bardwell Park
The same exists for Strata Title, although                                              many local and international families
                                               • Bayside West Precincts
ownership allows individual ownership of                                                alike.
                                               • Burwood, Strathfield and Homebush
part of a property (or ‘lot'), combined with
                                               • Camellia                               Suburbs in the Eastern Suburbs can
shared ownership in the remainder, or
common property, through a legal entity
                                               • Epping and Macquarie Park Urban        command some of the most picturesque
                                                 Renewal Area
called the owners corporation (see further                                              harbour views with the opportunity to
                                               • Glenfield
information on page 19).                                                                capture both the Sydney Harbour Bridge
                                               • Greater Macarthur Growth Area          and Opera House in the one frame.
Across Sydney, on the night of the
                                               • Leppington Town Centre                 Prestige properties on the leafy Lower
Census 2016, 29% of residential private        • Riverwood                              North Shore and trendy Inner West are
properties being lived in were owned           • Seven Hills                            also positioned with many vantage points
outright, whilst 33% were owned with a         • St Leonards and Crows Nest             for water views, and the city skyline.

10
FOCUS ON SYDNEY Q2 2019                              RESEARCH

The process of renting (also known as         sum—usually four (4) weeks rent—is held
leasing or letting) a residential property    in trust. At the termination of the tenancy
can vary in each state, but generally the     agreement, if the property is vacated and
main factors for a tenant to consider are     left in a suitable condition, the bond will
outlined below.                               be repaid in full to the tenant.

Tenancy Agreement                             Utility & Service Charges
A tenancy agreement (property lease) is a     Responsibility for utility charges will be
contract where one party conveys              stipulated within the tenancy
property to another for a specified period    agreement—this is not always covered by
of time, in return for a regular payment.     the landlord. Although, the landlord must
When leasing out a property, the owner        pay for the actual installation and initial
receives an income, but there are             connection costs for electricity, gas, oil
maintenance costs and responsibilities        and water supply. If these need replacing,
for the landlord.                             then the landlord must replace them to
                                              the minimum efficiency standards.
Before signing a tenancy agreement, a
tenancy application must be submitted to
the real estate agency (property manager)
                                              Inspections & Repairs
with proof of identity, ability to meet       Throughout the tenancy, the property will
rental payments and good references.          be periodically inspected by the landlord
                                              or property manager. A minimum of
                                              seven (7) days notice will be given with
Rent                                          the purpose of these inspections being to
As stipulated in the tenancy agreement,       check the maintenance of the property.
the tenant agrees to regularly pay rent to
the landlord. Most times this is              Repairs to the property that are due to
conducted via a property manager and          the normal wear and tear of the property
rent can be paid weekly, fortnightly or       must be paid for by the landlord.
monthly. Any future increases will be         Repairs classified as ‘urgent’ must be
stated within the tenancy agreement as        completed as soon as possible, while
the landlord cannot increase the rent until   ‘non-urgent’ repairs must be taken care
the end of the fixed term, unless             of before the 14 days of notification.
otherwise stated.

                                              Furniture
Term                                          Generally, residential properties do not
The length of a tenancy agreement can         come furnished, although this becomes
vary, however the standard term is six (6)    more common for a rental property closer
months for the initial agreement although     to the CBD. This will be clarified in the
alternate periods may be negotiable           tenancy agreement.
dependant on the requirements of the
landlord and/or tenant.
                                              Terminating the Tenancy
Once a tenancy agreement expires, the         A tenancy can be terminated at the
tenant can request a new fixed term, or       conclusion of the tenancy agreement.
alternatively the tenant can stay in the      However, both landlord and tenant can
premises at the same rent and conditions      request to end the tenancy for a variety of
until advised.                                reasons. Certain conditions must be met
                                              before it can be terminated, including
                                              days of notice, number of notices and
Bond                                          reason for termination.
A bond is a lump sum payment paid
upfront by the tenants as security before     For further information, contact
moving into the property. This lump           NSW Fair Trading.

                                                                                                       11
The Process                                  inspection to guarantee the quality of the       made should the market slow over this
                                             building and be aware of maintenance             time. It’s wise for this type of investment,
The process to purchase a residential
                                             required.                                        especially with smaller and unknown
property can vary widely but the most
                                                                                              developers, that contracts are reviewed
common steps are outlined below. For
                                             Negotiate by private treaty the highest          by legal representation and the ‘sunset
further information and clarity, consult
                                             price willing to be paid for the property        clause’ explained, which places a
with your legal representative.
                                             with the vendors (via the selling agent) or      deadline for the construction timeline.
                                             alternatively bid at public auction.             Should a development not proceed,
Finance Representation                                                                        deposits will be returned, but could be at
Before starting the journey to purchase a    Holding deposit is recommended for a             the expense of missed interest and
residential property, carry out due          private treaty until cooling off ends (say,      capital gains through other investments.
diligence of the subject property and        $1,000) until formal finance is approved;
surrounding area to ensure the price         at this time the full deposit (say, 10%) is      There can also be more tax depreciation
expectation can be achieved with the         paid. If bid was accepted at auction, the        available on new properties, meaning
allocated budget.                            full deposit is payable at this time (say,       maximising benefits and improving after-
                                             10%) with any cooling off period now             tax cash flow for investment properties.
The lending environment has become           void. The deposit is generally paid by
challenging in recent years, when seeking    cheque or electronic transfer (private
a loan from a financial institution. Many    treaty only).                                    General Costs
local banks will only lend if 20% of the                                                      When buying property in Australia, there
purchase price has been saved and there      Contracts are signed and exchanged by
                                                                                              are both federal and state taxes and a
is good evidence the property loan can       both parties and it’s time the solicitor (or
                                                                                              range of fees that are implemented.
be repaid regularly with the property loan   conveyancer) finalises the formal
based on market value. Shop around as        paperwork with the lender. Loan
mortgages and deposits can vary              documents are signed.                            Transfer Duty
significantly between providers.                                                              Transfer duty (also known as Stamp
                                             Settlement occurs when the property
                                                                                              Duty) is levied by the state government
                                             officially changes ownership, following
                                                                                              on the purchase of property.
Legal Representation                         one final inspection on the day and the
Engaging a solicitor or conveyancer prior    locks are changed.
to purchasing the property is highly                                                          Legal Fees
recommended so they can review the                                                            Legal fees will vary between legal firms
                                             Buying Off-The-Plan
contract before signing, and then stay                                                        and may be dependent on property
engaged throughout the process until the     In most cases, buying off-the-plan (OTP)
                                                                                              value. Generally fees range from $1,000
property settles (when the property          is the commitment to buy a property
                                                                                              to $3,000 plus GST.
officially changes ownership).               that’s not yet built.

                                             An OTP property can be better priced             Land Transfer Fee
Buying Established Property                  than established stock as developers are         When a property changes ownership, a
Search for a property priced to match        keen to secure sales in the project so           document known as a Land Transfer is
requirements for location, proximity to      lenders will provide funding and                 lodged and registered with the NSW
transport, work and education and the        construction can commence. There is              Office of State Revenue, and a fee is
quality, size and age of the dwelling.       also the potential flexibility at this time to   charged. It is this document that records
Staying abreast of comparable sales will     make design changes to an apartment or           the change of ownership. The cost to
assist in the negotiation process.           house prior to turning sod.                      register the title varies in each state of
                                                                                              Australia. A solicitor or conveyancer will
Inspect the property at an open house or     In most cases a deposit, typically 10%, is       perform this task on your behalf.
by private appointment. Request a copy       paid to the developer and the remaining
of the contract and have solicitor (or       is paid on settlement of the property,
conveyancer) read over the document.         allowing more time to save throughout            Mortgage Application Fee
                                             the construction period. Through this            A fee charged by the state government
Gain pre-approval for loan from lender       time, market forces may push market              for the registration of a mortgage. A
and confirm qualification from FIRB if       values up, at an advantage to the buyer,         lender will perform this task on your
required. Arrange a pest and building        at the same time consideration must be           behalf.

12
FOCUS ON SYDNEY Q2 2019                               RESEARCH

Both the Australian and state                            Since 1 July 2018, individuals can apply
governments provide incentives for                       to release these voluntary contributions,
                                                                                                          First Home Owner Grant Eligibility
Australian first home buyers.                            along with associated earnings, to assist        Criteria
                                                         in purchasing their first home. The              First Home Owner Grant (FHOG)
                                                                                                          New Homes
Incentives for                                           scheme allows Australians to make
                                                         voluntary contributions of up to $15,000         New South Wales; including Sydney
First Home Buyers                                        in any one financial year, to a maximum
                                                                                                           Threshold (the property must valued less than)
                                                         $30,000 across all years. This includes
in Australia                                             undeducted (non-concessional) personal
                                                                                                           Buyer of new property                         $600,000
                                                         contributions, deducted (concessional)
First Home Super Scheme                                  personal contributions and salary                 Builder of new property                       $750,000
The Australian Government, from 1 July                   sacrifice contributions. These
2017, has allowed individuals to make                                                                      Conditions
                                                         contributions, which are taxed at 15%,
voluntary concessional (before-tax) and                  along with deemed earnings, can then be           Dwelling must be new, unless specified;
non-concessional (after-tax) contributions               withdrawn for a deposit if the eligibility
into superannuation funds to fast-track                  criteria is met.                                  Persons must be a minimum age of 18 years;
the time taken to purchase a new home
                                                                                                           At least one applicant is a natural person;
under the First Home Super Scheme                        Concessional contributions and earnings
(FHSS).                                                  that are withdrawn will be taxed at               At least one applicant is an Australian permanent
                                                         marginal rates less a 30% offset.                 resident or citizen;

                                                         Contributions made under this scheme
                                                                                                           The contract date must be on or after 1 July 2017;
                                                         are not a new type of contribution. They
                                                         are voluntary contributions made to your          No persons to have held a relevant interest in any
                                                         superannuation fund. As a result, a               residential property in Australia prior to 1 July 2000;

First Home Super Scheme Eligibility                      separate special account doesn't need to
                                                         be established nor does the fund need to          Must reside in the home for a continuous period of
Criteria, Australia
                                                                                                           at least six (6) months.
First Home Super Scheme (FHSS)                           be notified.
Conditions
                                                         For further information, contact the
                                                         Australian Taxation Office.
First home buyer – never owned property in Australia
– this includes an investment property, vacant land,
commercial property, a lease of land in Australia or a
company title interest in land in Australia;
                                                         Incentives for First
Must live in the premises you are buying, or intend      Home Buyers in
to as soon as practicable;                                                                                Stamp Duty Concessions
Must intend to live in the property for at least
                                                         New South Wales                                  First Home Buyers Assistance scheme
six months of the first 12 months you own it, after it                                                    can provide a concession on state-based
is practical to move in;
                                                         First Home Owner Grant
                                                                                                          stamp duty for dwellings or land.
                                                         The First Home Owner Grant (FHOG) New
Superannuation contributions can be from any age
                                                         Homes is currently available in NSW.
but persons must be a minimum age of 18 years to                                                          If the new or established first home is
request for funds to be released;                        An eligibility criteria must be met before
                                                                                                          valued at less than $650,000, stamp duty
                                                         the grant is issued.
Not previously requested the Commissioner to issue
                                                                                                          is exempt, while purchasers may be
a FHSS release authority;                                                                                 eligible for a stamp duty reduction if
                                                                                                          valued under $800,000.
Eligibility is assessed on an individual basis—so
multiple persons can access their own FHSS
contributions to purchase the same property;
                                                         First Home Owner Grant Available                 Stamp duty on lenders mortgage
                                                         First Home Owner Grant (FHOG)
                                                                                                          insurance is exempt.
                                                         New Homes
If any persons have previously owned a home, it will
not stop any other persons being eligible to apply;
                                                         New South Wales; including Sydney                If land is valued under $400,000, stamp
Don't sign contract to purchase or construct the                                                          duty concessions are available and
                                                         Grant
home until money is released or there may be FHSS                                                         exempt if valued under $350,000.
tax liability; this may take up to 25 days.
                                                         One-off                                $10,000
                                                                                                          For further information, contact the NSW
                                                                                                          Office of State Revenue.

                                                                                                                                                                     13
Current
 regulations for
 foreign investors
 purchasing
 residential                 • Must apply and gain approval from
                               the FIRB prior to purchasing
 property in Sydney            property in Australia.
                                                                      • A temporary resident is a person
                             • Applications are generally approved      who is residing in Australia and
                               if the property purchased adds to        holds a temporary residency visa
                               the housing stock, including new         which permits them to stay in
                               dwellings that are yet to be             Australia for a continuous period of
                               occupied or sold, off-the-plan           more than 12 months (regardless of
                               properties under construction or yet     how long remains on the visa); or
                               to be built. This includes vacant        has submitted an application for
                               land for residential development         permanent residency and holds a
                               where ongoing construction begins        bridging visa which permits them to
                               within 24 months.                        stay in Australia until that application
                                                                        has been finalised.
                             • Non-permanent residents are
                               forbidden to purchase established      • Are required to notify FIRB prior to
                               dwellings as investment properties       purchasing property in Australia,
                               or as homes. Although there could        including an established dwelling, a
                               be an exception if the established       new dwelling that has been
                               dwelling is being redeveloped into       purchased directly from the
                               multiple dwellings, and as a result,     developer and has not been
 For further information:      there is an increase in the dwelling     previously occupied for more than
                               count. Over the development              12 months in total and vacant land
                               period, the house must remain            for residential development where
                               unoccupied.                              ongoing construction begins with 24
 Foreign Investment Review                                              months. Temporary residents are
 Board [FIRB]                • Foreign buyers can purchase an off       not permitted to buy established
                               -the-plan dwelling, when another         dwellings as investment properties.
 firb.gov.au                   buyer has failed to reach
                               settlement—reverting to its previous   • May acquire one established
                               status as a new dwelling. An             dwelling only and it must be used as
                               apartment or house that has just         their main residence (home) in
 Department of Immigration     been built, or is still under            Australia. Such proposals normally
 and Border Protection         construction and for which the title     meet with no foreign investment
                               has never changed hands, is not          objections subject to conditions;
 border.gov.au                 considered an established dwelling.      such as, that the temporary resident
                                                                        sells the property when it ceases to
                                                                        be their main residence.

                                   Non-Permanent                        Temporary Resident
                                      Resident                              (Temporary
                                  (Foreign Investor)                      Residency Visa)

14
FOCUS ON SYDNEY Q2 2019                            RESEARCH

The Australian Government welcomes foreign investment into Australia’s residential property market. The current rules around foreign
investment in residential property aim to direct investment into new housing, increasing the housing supply and support local
economic activity.

 • Acquiring second-hand dwellings for
    the purpose of providing housing for
    their Australian-based staff normally
    meet with no objections subject to
    the conditions set by FIRB.                                                              • Investment migrants under this
                                                • Investment migrants under this                scheme are required to invest at
 • The company must sell the property             scheme are required to invest at              least AUD$15 million into complying
    if it is expected to remain vacant for        least AUD$5 million into complying            investments in Australia for a
    six months or more. In remote and             investments in Australia for a                minimum of 12 months before
    rural locations foreign companies             minimum of four years before                  becoming eligible for permanent
    may rent out dwellings acquired               becoming eligible for permanent               residency; a more expeditious
    under this category only where they           residency.                                    pathway than the SIV.
    are unable to sell the property.
                                                • The SIV scheme is intended to              • The PIV scheme is aimed at
 • Whether a company is eligible, and             target the migration of high net-             attracting applicants with business
    the number of properties it may               worth individuals to Australia with           and entrepreneurial skills and capital
    acquire under this category, will             the longer-term aim of transferring           to enhance investment into
    depend upon the scope of the                  wealth of international businesses            innovative Australian businesses
    foreign company's operations and              and individuals to benefit Australian         and the commercialisation of
    assets in Australia.                          businesses and the broader                    Australian ideas, research and
                                                  economy.                                      development.
 • Foreign companies would not be
    eligible under this category where          • The SIV scheme was introduced on           • The PIV scheme was introduced on
    the property would represent a                24 November 2012 and is operated              1 July 2015 and is operated by the
    significant proportion of its                 by the Department of Immigration              Department of Immigration and
    Australian assets.                            and Border Protection.                        Border Protection.

                                                Significant Investor Visa (SIV)                Premium Investor Visa (PIV)

      Foreign Company                                                   Investment Migrants
       with Australian                                              (High Net Worth Individuals)
          Business

                                                                                                                                         15
Additional Costs for                          Fees payable by Foreign Investors,
     Foreign Buyers                                Residential property
                                                   Based on Property Value, AUD
     All foreign persons — that is, temporary
     residents and non-residents — can apply                    $0 - $1,000,000    $5,600
     to purchase vacant residential land for
     development and newly constructed                  $1,000,001 - $1,999,999    $11,300

     dwellings in Australia.
                                                        $2,000,000 - $2,999,999    $22,700

     Non-resident foreign persons are                   $3,000,000 - $3,999,999    $34,000
     generally prohibited from purchasing
                                                        $4,000,000 - $4,999,999    $45,400
     established dwellings in Australia.
     However, temporary residents can apply             $5,000,000 - $5,999,999    $56,700
     to purchase one established dwelling to
     use as their residence while they live in          $6,000,000 - $6,999,999    $68,100

     Australia, although on the condition the
                                                        $7,000,000 - $7,999,999    $79,500
     property is sold when it ceases to be
     their principal place of residence.                $8,000,000 - $8,999,999    $90,900

                                                        $9,000,000 - $9,999,999    $102,300
     Once a property has been identified to
     purchase, an application must be made                  $10,000,000 or more    tiered per million
     to the Australian Foreign Investment
     Review Board (FIRB).

     It is highly recommended that an
     application is submitted prior to the
     advance of any transaction—to ensure
     complete legality of the purchase.
                                                   The FIRB provides an interactive fee
     Additionally, approval from FIRB is
                                                   estimator.
     property-specific—one application per
     property.
                                                   Duty Surcharge
     When the application is submitted, the        The NSW state government imposes a
     government investigates to ensure that        duty surcharge for foreign investors,
     the purchase of the property will be in the   payable in addition to general state-
     country’s best interest.                      based transfer duties.

     A decision on the application is made         Since 1 July 2017, foreign purchasers are
     within 30 days—unless complications or        required to pay an additional 8% of the
     alterations occur, in which it may take up    sale price.
     to 90 days.
                                                   Other states with foreign investor duties
     Foreign Investor Application                  include Victoria (7%) as of 1 July 2016,
                                                   Queensland (7%) as of 1 July 2018 and
     Fee                                           Western Australia (7%) as of 1 January
     All foreign investors must pay a fee          2019.
     before their foreign investment
     application will be processed.

     Foreign investors are required to pay         Duties payable by Foreign Investors,
     $5,600 to purchase a new property if          Residential property
     valued under $1 million, with additional      Based on Property Value, AUD, Payable in
                                                   addition to general state-based transfer duties
     fees payable per million in the value of
     the property.                                 New South Wales; including Sydney

                                                   Duty Surcharge on Purchase Price;
     This fee does not provide any assurance                                                  8%
                                                   from 1 July 2017
     of securing the property and strict
     penalties are applied for those who
     breach the rules.

16
FOCUS ON SYDNEY Q2 2019                    RESEARCH

Estimated Property Purchase Costs, Sydney
All costs represented in AUD, As at 1 April 2019

Purchase Price                                      350,000     500,000     750,000    1,000,000   1,250,000   1,500,000

Transfer Duty                                         11,240      17,990      29,240      40,490      54,240      67,990

Land Transfer Fee                                        150         150         150         150         150         150

Legal Fee (includes GST payable)                       1,500       1,500       1,500       2,000       2,000       2,000

Mortgage Application Fee                                 150         150         150         150         150         150

General: Estimated Total Costs                        13,040      19,790      31,040      42,790      56,540      70,290

Foreign Investor Application Fee*                      5,600       5,600       5,600       5,600      11,300      11,300

Foreign Investor Duty Surcharge @8%                   28,000      40,000      60,000      80,000     100,000     120,000

Foreign Investor: Estimated Total Costs               46,640      65,390      96,640     128,390     167,840     201,590

Estimated Property Purchase Costs, Sydney
All costs represented in AUD, As at 1 April 2019

Purchase Price                                     1,750,000   2,000,000   2,250,000   2,500,000   5,000,000   7,500,000

Transfer Duty                                         81,740      95,490     109,240     122,990     290,490     465,490

Land Transfer Fee                                        150         150         150         150         150         150

Legal Fee (includes GST payable)                       3,000       3,000       3,000       3,000       3,000       3,000

Mortgage Application Fee                                 150         150         150         150         150         150

General: Estimated Total Costs                        85,040      98,790     112,540     126,290     293,790     468,790

Foreign Investor Application Fee*                     11,300      22,700      22,700      22,700      56,700      79,500

Foreign Investor Duty Surcharge @8%                  140,000     160,000     180,000     200,000     400,000     600,000

Foreign Investor: Estimated Total Costs              236,340     281,490     315,240     348,990     750,490    1,148,290

                                                                                                                            17
18
FOCUS ON SYDNEY Q2 2019                            RESEARCH

                                                                                            WHAT IS THE
In Sydney, costs and taxes associated
with the ownership of a property can vary
                                              Additional Costs as                           ROLE OF AN
dependent on the services the building        a Landlord                                    OWNERS
provides.                                                                                   CORPORATION?
                                              Property Management Fees
General Costs                                 Letting Fees are usually equivalent to two    The rights and responsibilities of
                                              (2) weeks rent paid to the agent as a fee     both the owners corporation and
Land Tax                                      for finding and securing a tenant.            its members is different in each
Land tax is an annual state tax that is       Management Fees cover any costs               state but generally comprise:
calculated based on the aggregated            associated with managing the property
taxable value of all land owned (or jointly   and range from 7% to 8.5% plus GST.           •   Maintain and repair the common
owned) by an individual. Land Tax is not                                                        property of the strata scheme;
applied if the property is your principal     Utility and Service Charges                   •   Manage the finances of the
residence.
                                              The owner must pay for the use of                 strata scheme;
                                              utilities (electricity, gas, oil and water
Council Rates                                 supply). Although if the owner leases the     •   Maintain required insurances
                                              property to a tenant, some of these can           including public liability and
This varies across states and local                                                             building insurance where
government areas. This is the tax the         be passed on but this must be stipulated          applicable;
council charges owners for the services       within the tenancy agreement. However,
to the property—generally paid quarterly      the owner must pay for the actual             •   Keep records of all details of
or annually.                                  installation and initial connection costs.        notices given under the relevant
                                                                                                state strata management
                                                                                                legislation;
Income Tax                                    Landlord Insurance
                                              Landlord insurance is designed                •   A strata register must be
Income tax is payable on gross rental                                                           established and maintained,
income, less any allowable deductions         specifically to cover rental properties.          detailing the owner’s name or
incurred in earning that income. As there     Depending on the insurance provider, it           agent’s name and address for
                                              protects the home from damage, theft,             each lot within the strata
are a number of potential allowable
                                              severe weather or rent default in some            scheme;
deductions, it is recommended that an
                                              cases. To decrease risk, landlord
Australian Tax advisor is consulted.
                                              insurance is highly recommended.
                                                                                            •   Administration of any by-laws for
                                                                                                the strata scheme;
Owners Corporation                                                                          •   To provide a grievance register.
If the purchased property is Strata Titled    Additional Costs for
(a building with common areas and
facilities for the use of all occupants of    Foreign Owners
the building), an owners corporation will
be established for the building.              Foreign-Owned Vacant
                                              Residential Property Levy
A regular fee must be paid to the Owners      The Australian government charges an
Corporation to maintain these common          annual levy for foreign-owned vacant
areas. This can include elevators, foyers,    residential property (ghost tax). The levy
swimming pools and spa, gymnasiums,           is equivalent to the FIRB application fee
plants and foliage, lighting, staircases,     imposed at the time the property was
fences, visitor car parks and security.       purchased if they fail to occupy or lease
                                              for at least six (6) months of the year.
A group of elected people manage the
operations and decision-making of the         Land Tax Surcharge for
common area of the property.                  Foreign Investors
In most states, the owners corporation        The NSW state government has imposed
comprises of an executive committee           a 2% land tax surcharge for foreign
(generally individual owners of the           investors since 1 July 2017. This is
apartments) who make decisions on the         payable in addition to general land tax
behalf of their owners.                       and is based on the taxable value.

                                                                                                                                    19
There are costs and taxes to consider
                                           when selling residential property in          Additional Costs for
                                           Australia.
                                                                                         Foreign Owners
                                           General Costs                                 Capital Gains Tax Clearance
                                           Legal Fees                                    Certificate
                                                                                         Foreign and temporary tax residents are
                                           Legal fees include, but are not limited to,
                                                                                         no longer entitled to access the CGT
                                           the costs for preparing a contract for
                                                                                         main residence exemption from 7.30PM
                                           sale. The solicitor or conveyancer fee
                                                                                         (AEST) on 9 May 2017.
                                           could be dependent on value of property,
                                           and may vary between state and territory
                                                                                         Although, existing properties held prior to
                                           as well as the particular solicitor chosen.
                                                                                         this date will be grandfathered until 30
                                           The cost may range between $2,000 and
                                                                                         June 2019.
                                           $4,000, plus GST.

                                                                                         A CGT withholding rate for foreign
                                           Real Estate Agent Fees                        investors is applicable for all contracts
                                           An agent fee is the commission paid by        with a market value over $750,000 when
                                           the owner, to the agent, for selling the      signed on or after the 1st July 2017.
                                           property—either tiered rate or a fixed
                                           rate. Do ensure you understand the            This requires 12.5% of the purchase
                                           breakdown of the fee structure as             price to be withheld by the purchaser and
                                           commissions will vary between states,         remitted to the Australian Taxation Office
                                           and price point. Fees often range             (ATO) unless a clearance certificate has
                                           between 2% and 3% of the value of the         been provided by the vendor. The money
                                           property sold.                                withheld is a portion (not in addition to)
                                                                                         from the agreed sale price.

                                           Marketing Costs                               If a purchase price negotiated between a
                                           When an agent is selected to sell the         purchaser and vendor is on an ‘arm’s
                                           property, the fee breakdown will often        length basis’, then the purchase price
     DOWNSIZER                             stipulate the budget associated to the        may be used as a proxy for market value.
     INCENTIVE                             marketing and advertising of the
                                           property. Additionally, there may be a        The ATO can only grant a clearance
     Downsizers (aged 65+ years)           period allocated to marketing with            certificate to a vendor who is considered
     can make a non-concessional
                                           multiple open house inspections over          to be an Australian resident.
     (after-tax) contribution into their
     Superannuation fund of up to          several weeks. Budgets for marketing,
     $300,000 from the sale of their       media, as well as length of advertising       Do note a residency status for tax
     family home.                          should all be discussed with the agent to     purposes is not necessarily the same as
                                           ensure maximum advertising potential.         that for immigration purposes; or for the
     Introduced from 1 July 2018,                                                        FIRB. It is recommended to seek
     the legislation states the
                                                                                         professional legal advice to further clarify
     property sold must be the             Capital Gains Tax                             the residency definition for this
     person’s home (main residence
                                           Capital gains tax (CGT) is a federal tax      legislation.
     and be eligible for the main
     residence exemption for capital       levied on the gain or loss upon the sale of
     gains tax) and held for at least      an investment property.                       The foreign resident CGT regime for
     the past 10 years.                                                                  withholding tax applies to taxable
                                           The tax is implemented on the difference      Australian property including vacant land,
     This will increase their tax-free     between the cost of acquiring the             buildings, residential and commercial
     fund limits. Couples will be able     property, and the value when sold. The
     to contribute up to $300,000                                                        property, leaseholds and strata title
                                           difference is then added to the income        schemes.
     each, giving a total contribution
     per couple of up to $600,000.         tax for the individual or company for that
                                           financial year, and taxed accordingly with    For further information, contact the
                                           those rates.                                  Australian Taxation Office.

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FOCUS ON SYDNEY Q2 2019                                RESEARCH

In recent years, the federal and state governments have introduced foreign investor fees, tax surcharges and levies. Below is a
summary of the current process for foreign buyers when purchasing, owning and selling Australian residential property.

The Process for Foreign Buyers when Purchasing, Owning and Selling Residential Property, Sydney
As at 1 April 2019

                                                                                                                                  21
Sydney is the financial and business services hub for Australia, attracting many
                             professionals from around the globe. According to the Global Financial Centres
                             Index 25 compiled by think-tank Z/Yen, Sydney ranked 11th on the index of global
                             financial centres in 2019. Sydney scored 735, up by 2 points. Sydney is home to
                             branches of the Reserve Bank of Australia (RBA), Australian Prudential Regulation
       FINANCE HUB OF        Authority (APRA) and the Australian Securities Exchange (ASX).
          AUSTRALIA.

                             The NSW economy has been strong over the past three years, with the outlook for
                             growth to remain above trend for the next three years according to projections in the
                             NSW State Budget. NSW has been the fastest growing state economy over these
                             past three years, on the back of elevated household consumption, dwelling
                             construction and public investment. Construction activity and expanding health
                             services have contributed to more than 500,000 new jobs created since April 2011.
      ROBUST ECONOMIC        Momentum in the labour market remains strong, with employment growth forecast of
         OUTLOOK.            3% in 2018-19.

                             The NSW Government has committed to spending $87b over the next four years on
                             health, education and transport infrastructure projects to ease cost of living
                             pressures. Major transport projects to receive funding include the new Metro West
                             (new underground rail line between CBD and Parramatta), the new Parramatta light
                             rail, Metro NorthWest (underway), the new Sydney Western Harbour Tunnel and
                             Beaches Link, the first phase of underground F6 motorway between Sydney and
         GOVERNMENT
                             Wollongong and road upgrades around the Western Sydney Airport.
         INVESTMENT.

                             International departure capacity at Sydney Airport expanded by 23.4% between
                             2012 and 2017 as reported by OAG Schedules Analyser. The increase has been
                             driven by Oneworld member Qatar Airways adding Sydney to its network map over
                             the past two years and six new routes to China following a deal to end passenger
                             capacity restrictions. The top three Sydney to China two-way routes by capacity, in
                             2017, was with Shanghai, Guangzhou and Beijing. Each year since 2012, Tourism
     RISE IN INTERNATIONAL
                             Australia has calculated international visitors to Sydney has grown on average 7.6%.
            VISITORS.

                             The number of international students enrolled to study in NSW education facilities
                             rose 10.5% in the year ending December 2018, according to the Department of
                             Education and Training. Higher education facilities saw annual growth of 14.6%,
                             while vocational education & training grew by 13.3%. The SSVF has made the
          GROWTH IN          process of applying for a student visa in Australia easier to navigate for both
        INTERNATIONAL        students and guardians.
          STUDENTS.

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