Increased Indonesian interest in Australian residential property market a boost for local economy, says Nyko

17 July 2014: Indonesia has enormous potential as a source of foreign investment into the Australian retail housing market, says Bill Nikolouzakis, Director, of the Melbourne-based Nyko Property.

Nikolouzakis, who was addressing the House of Representatives’ Standing Committee on Economics inquiry into “Australia’s foreign investment policy as it applies to residential real estate”, said such investment was positive for the Australian economy, and that the current policy framework was fundamentally correct to ensure there were no abuses of the system.

“From our experience there is a degree of misunderstanding around foreign investment in residential real estate, and if this committee’s report only serves to clarify all the issues then it will have achieved a worthwhile goal.

“In our opinion, this misunderstanding, and, in some instances, the misreporting of what is and isn’t permissible is terms of foreign investment in residential property, has the potential to damage a valuable source of investment in what is a $4.75 trillion industry.

Nikolouzakis said that although much of the focus on overseas investment into Australia had been on China, Indonesia was an emerging market that not only offered immediate economic benefits but had the potential to help nurture one of Australia’s most important foreign relationships.

He cited four factors to the committee for the Indonesian interest in the market:

  • Predominantly demand is not from Indonesian investors looking for high growth assets but rather from wealthy individuals who want to diversify their investment portfolios into a country with a perceived stable political system and sound judicial framework;
  • There is demand from Indonesians who would like to send their children to university in Australia. In our opinion this factor is not as important as asset diversification;
  • There is an element of investors who potentially might want to migrate to Australia, which is a smaller group again;
  • Post the GFC, in particular, our property market has performed strongly and much more consistently compared with other markets that attract them.

Nikolouzakis said Nyko had licensed its business name in Indonesia in March this year and had given a local agent the right to distribute Nyko’s properties in Indonesia. Nyko’s principals have since held a property seminar in Jakarta where they witnessed firsthand the interest in the Australian market and have now committed to opening offices in Jakarta and Surabaya.

“It is a market, we believe, that has real potential in terms of attracting foreign investment into Australia because of the high demand there for good quality investment properties,” he said.

He said fears the overseas investment was “crowding out” local buyers simply did not accord with the facts.

“When purchasing new property, we have found that foreign investors buy apartments in the larger blocks within the CBDs of Melbourne and Sydney and to a lesser extent Brisbane.

“This is a market that Nyko Property’s clients in Australia normally are not very supportive of as an investment option and are therefore not competing with foreign investors for those properties.

“At Nyko Property we see the involvement of foreign investors in the residential property market to be only positive from that standpoint, investing in property that is required for our cities to grow and become the cosmopolitan centres that we know work so well across the world when people live closer to their workplaces,” he said.


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Simrita Virk
Shed Media
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