Working hard to court Indonesians<\/p>\n
JAKARTA (JP): Australian property developers consider
\nIndonesia a great foreign market. The Australian government is
\nalso encouraging foreigners to purchase apartments in the
\ncontinent.<\/p>\n
Many Indonesians are keen to purchase properties in Australia
\nfor schooling, investment or retirement needs.<\/p>\n
Dina Pattiasina, director of residential property consultant
\nColliers Jardine, said Indonesians whose children were studying
\nin Australia were the main target of most Australian developers.<\/p>\n
\"The second prime target market includes those who want to buy
\nproperties in Australia as an investment. Interestingly, though
\nthe number is still insignificant, more and more Indonesians want
\nbuy properties in Australia to use in their retirement,\" she
\nsaid.<\/p>\n
\"People who purchase the properties for schooling needs,
\nchoose properties close to colleges and universities. For those
\nwho want to buy properties as an investment, the central business
\ndistrict is the best location. Meanwhile people who want to live
\nin Australia after their retirement, choose landed houses in
\nsecondary locations where the prices are lower,\" she said.<\/p>\n
According to Dina, most Indonesians can afford properties
\nranging between A$200,000 and A$500,000, slightly higher than
\nwhat the average Australian can afford.<\/p>\n
She said the three favorite Australian cities for Indonesians
\nwere Sydney, Melbourne and Perth.<\/p>\n
Property prices vary according to the cities, she added.<\/p>\n
For a long time, Australia has been a popular country for
\nIndonesians wanting to study abroad. For four consecutive years
\nuntil 1997, Indonesian students were the second highest in number
\namong foreign students studying in Australia. From 1998 to 1999,
\nIndonesian students were on top of the list, followed by students
\nfrom Singapore and Hong Kong.<\/p>\n
In 2000, the number of Indonesian students reached 17,626,
\nmostly pursuing graduate, postgraduate, undergraduate and
\nvocational courses or attending high school, according to data
\nfrom the Indonesian Embassy in Canberra.<\/p>\n
It is understandable that most Indonesian students are self-
\nfunded as many of their parents can even afford to buy properties
\nfor their accommodation. Only about 3 percent of the total number
\nof Indonesian students are on an AusAid scholarship. AusAid is an
\nAustralian agency that offers financial support.<\/p>\n
The data also shows that Australia is the second most
\nattractive place to study for Indonesian students, after the
\nUnited States.<\/p>\n
High-income group<\/p>\n
Realizing the trend, several Australian developers regularly
\nhold property exhibitions in the capital to lure prospective
\nbuyers among Indonesia's high-income group.<\/p>\n
Among the leading developers are Central Equity Limited and
\nthe Brady Group. Collier recently held an exhibition here
\npromoting its 45 Ord apartment in Perth.<\/p>\n
Central Equity, a publicly listed developer, has operated a
\nlocal branch in Jakarta and Surabaya for quite sometime. The
\ncompany has several apartment projects in Melbourne.<\/p>\n
General manager of Central Equity Victor Li, agreed that most
\nof the potential buyers from Indonesia were those who had
\nchildren studying in Australia.<\/p>\n
\"If their children were studying for three or four years,
\nowning an apartment would be much cheaper for the parents than
\nrenting,\" he said.<\/p>\n
Moreover, when they do not need the apartment anymore, it can
\nbe sold at a profit, he added.<\/p>\n
Many Indonesians are also interested in buying apartments in
\nAustralia as the units can be leased with a leasing guarantee.<\/p>\n
Li said buying an apartment unit in Melbourne, Victoria, for
\nexample would be very advantageous compared to renting one.<\/p>\n
For example a two-bedroom apartment in Southbank, Melbourne,
\ncosts A$339,000. When purchasing a property in Australia, a
\nprospective buyer can borrow up to 70 percent (A$237,300) of the
\ncost of the property from any local bank, therefore he or she
\nwill only spend A$101,700 as equity.<\/p>\n
With interest fixed for five years at 7 percent, total
\ninterest paid over the period will be A$83,055. So total expenses
\nfor a five-year period is some A$22,104. Therefore the cost of
\nbuying for a five-year period is A$105,158.<\/p>\n
The figure is lower than renting for the same period of time
\nwhich works out to about A$112,391, assuming a rental fee of
\nA$391 per week and an increase of 5 percent per year.<\/p>\n
When the owner wants to sell the property, he or she will earn
\na profit as the value of the property increases at an approximate
\nrate of 5 percent per annum.<\/p>\n
So, if the initial purchase price was A$339,000, the value of
\nthe property after five years will be A$423,750, giving the
\nseller a A$84,750 gain. After deducting commission, legal and
\nadvertising costs of about A$12,394 in total, the owner will
\nstill gain A$72,356 or 71 percent as a percentage of the original
\nequity of A$101,700.<\/p>\n
Most people are attracted by this forecast. It is also an
\nattempt to lure prospective buyers among the high-income group.<\/p>\n
Besides the forecast, the quality of the buildings is better
\nthan in Indonesia.<\/p>\n
Promotion<\/p>\n
Meanwhile, Matthew Georgeson, property consultant of Brady\/PT
\nBrady Property Consultancy Indonesia, said his company's office
\nin Jakarta was its only overseas branch.<\/p>\n
\"We hold promotions and exhibitions regularly in various
\ncities across Indonesia including Medan, Bandung, Semarang,
\nSurabaya, Makassar and Manado,\" he said.<\/p>\n
Brady's major target had shifted from investors (80 percent)
\nduring the period before the monetary crisis to people who want
\nto buy apartments for their children studying in Australia (70
\npercent) after the prolonged economic crisis, he said. Brady
\nfocuses on apartment projects in Melbourne.<\/p>\n
Georgeson agreed easy payment schemes had been made available
\nto encourage prospective buyers.<\/p>\n
\"Prospective buyers should remember that they are only
\nrequired to make a deposit of 10 percent of the total purchase
\nprice. And the payment will go to a trust account, not to the
\ndeveloper. This is to protect the buyer,\" he said.<\/p>\n
He said the balance could be paid, after the construction was
\ncompleted, on several schemes such as cash or installments, which
\ncan be arranged with the bank.<\/p>\n
Since Indonesia is regarded as one of the best markets for
\nAustralian property developers, there must be many Indonesians
\nowning properties in the continent.<\/p>\n
Both companies, however, refused to reveal how many Indonesian
\nhad bought or were purchasing their apartments.<\/p>\n
Li said there were also other factors encouraging people to
\nbuy Australian properties.<\/p>\n
\"The market is very strong and the government supports first
\nhome grants for Australian citizens and permanent residents. The
\ninterest rates, meanwhile, remain low. Thirdly, the unemployment
\nrate is also low. Altogether, the conditions create a healthy
\nclimate to buy properties,\" he said.<\/p>\n
Australia has been also a favorite place to live in,
\nespecially after the United Nations Development Program (UNDP)
\nranked it the second best place in the world. UNDP issued
\nrecently its report on the Human Development Index 2001 and put
\nNorway as the best place in the world. The third, fourth and
\nfifth ranked were Canada, Sweden and Belgium. Indonesia ranked
\n102th out of 162 nations monitored.<\/p>\n
It is likely that more Indonesian will flock to Australia and
\nbuy properties there.<\/p>\n
Australian property market provides investment security and is
\na very mature market with a promising annual appreciation rate.<\/p>\n
In addition, many Indonesians also prefer Australia for its
\nproximity, cost and weather.<\/p>\n
It is important to notice that based on the Federal Investment
\nReview Board's regulation, only half of the new apartments built
\nin the country may be bought by foreigners. In addition,
\nforeigners are only allowed to purchase new apartments or houses.<\/p>\n
But, before you make a decision, the following tips might be
\nvaluable:<\/p>\n
1. Buy property directly from the developer.<\/p>\n
2. Check the track record and portfolio of the developer.<\/p>\n
3. Make sure the developer is a reputable company by checking
\nits existing projects.<\/p>\n
4. Meet the developer in person.<\/p>\n
5. Check and visit the construction site.<\/p>\n
6. Hire a solicitor to study the contract.<\/p>\n
7. Study the contract carefully to see if there are after
\nsales service, and construction or building structure warrants.<\/p>\n
8. Study the payment scheme carefully to avoid excessive stamp
\nduty and select a bank that offers the best interest rates.<\/p>",
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