Expats zoom in on property and stocks as the Aussie dollar slides
Brett Evans’ financial planning business is about to get very busy. His company, Atlas Wealth Management, which specialises in servicing Australian expatriates had 20 calls from clients last month, twice as many calls than usual. And they were all looking to buy or sell properties, taking advantage of the falling value of the Australian dollar.
“They’re realising the dollar is low and want to get into property. My clients have been keeping an eye on the dollar since it was at 80 cents,” he said.
“Property is expensive, sure, but if you are living in New York or London and with the Australian dollar falling, that property is starting to look a lot cheaper,” he said.
Mr Evans said many of his clients were looking for long-term homes and were taking advantage of lower offshore borrowing rates of 2 to 2.5 per cent in places like Singapore and Hong Kong to get cheap funding.
Buying agent, Paul Osborne has been fielding calls from expats in oil and gas fields in Kazakhstan and Nigeria – mainly expats who get paid in US dollars.
“We recently helped a client who is working on the World Cup project in Qatar purchase a property in Albert Park. They are earning US dollars, tax free,” he said.
Mr Osborne, whose Secret Agent company is based in Melbourne, said expats want to invest in inner city suburbs like Albert Park, Middle Park and South Melbourne and were happy to spend in the millions.
Ray White’s Simon Platt closed two apartment sales in Sydney’s Coogee last week for expats in Singapore who bought without viewing the properties.
“There’s a confidence to act quickly and that’s rare. The property market is still rising but for them, right now is a perfect meeting point of the market and the Aussie dollar,” he said.
The Australian dollar fell to a six-year low of US69.7¢ on Friday afternoon, the second time it had dipped below US70¢ cents in three days. Lower than expected economic growth figures for the second quarter triggered the plunge.
“I wouldn’t be surprised if the Australian dollar is printed with a ‘five’ handle in the next three years,” Deutsche Bank chief economist Adam Boyton said.
“As far as reaching a bottom, I don’t think we’ll know what that is until Chinese growth picks up, and our economy adjusts from the mining boom enough that the RBA will be considering raising rates. All of those things seem quite some distance away, and I don’t think the Australian dollar is likely to rise until at least 2017 or 2018.”
AMP Capital’s chief economist Shane Oliver said expats punting on the dollar could hold out longer.
“A bird in the hand is worth two in the bush but the fundamentals are so bad now the dollar could go lower than 60 cents in 18 months,” he said.
For Perth-born Matt Contuzzi working in Shanghai, waiting is a good strategy, especially with difficulties getting his savings out of China.
“The combination of house prices easing up, the weak dollar against the renminbi is fantastic. I think I can wait but I won’t wait till it’s nothing,” he said. Mr Contuzzi moved to Shanghai three years ago to “seek his fortune”. He’s currently working as a financial analyst for Nielsen, the information and measurement company.
Mr Contuzzi is keen to put down roots in Perth, where the rest of his family remains. “At Christmas, I’ll look and give myself six months to lock something in,” he said.
New York expat entrepreneur, Michael Giles, 32, is also cheering on the dollar fall but is keener on stocks.
“Property is interesting given the exchange rate but less so because property has had a very strong run, whereas the stock market has pulled back at the same time as the dollar has fallen,” he said.
Consultant John Warren, who is living in London, said after moving some money across, he and his girlfriend were surprised at how much they got in Australia relative to what was available in the UK.
This article originally appeared as an interview in the Australian Financial Review