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Peta Tomlinson

Investors can find low-risk properties, some with rental returns of 7 per cent since 1978, to build their portfolios

Perth is the quiet achiever of Australian property investment.

While all eyes have been on the hoopla of soaring prices in Sydney, Melbourne and even Brisbane, few have looked to the Western Australian (WA) capital in building their property portfolio.

Yet 'sleepy little Perth' has been bubbling along on the backburner, achieving residential rental returns for two-bedroom units of more than  7 per cent since 1978.

However, with east coast prices out of reach of many, investors are  going west. Hong Kong-based Australian property investment consultant Michael Bentley, managing director of Citylife Property Group, was one who went  'to see what all the fuss was about'.

'More  clients started asking me about Perth so I began taking trips there about eight months ago to do my due diligence,' he said.

Mr Bentley found that while Perth has the highest percentage of overseas immigrants per head of population, when it comes to interstate migration, Australians traditionally preferred the eastern seaboard.

As he delved deeper on each trip, he  found another swing  and became  more excited about real estate prospects in Perth.

'As I learnt  the driving factors, I became  bullish,' he said. 'Perth has had the highest total increase in migration for the past six years in a row, and now, it also has the highest natural population increase. People are voting with their feet, not only for the tremendous lifestyle, but for the cost difference.'

Yet for all that, property prices in Perth remained in the doldrums in the 1990s. Mr Bentley noted that all  Australian cities operated on different property cycles, and  because Sydney's prices had skyrocketed, it did not mean  WA had followed suit.

He also discovered the seemingly impossible - that land supply once thought limitless had started showing signs of drying up. People were queueing overnight for land releases 45 minutes from the city.

'Perth is a  different market from anything else in Australia, and not  easy  to understand,' Mr Bentley said.

He first looked at  city centre apartments, and whether their upward price trend would follow  Sydney, Melbourne and Brisbane. He  concluded it would not. The Perth central business district  closes  after business hours, with 'not one restaurant open after 8pm' - hardly the lifestyle one would expect with inner-city living. But the 'city fringe' - within 5km to 10km of the river, beach and CBD - was where the night action is.

'I advise people when investing in property in Perth to think inner suburbs - where I discovered there was an enormous shortage. Because Perth is at the early stage of current lifestyle trends  [in urban apartment living], there is reason to believe it will be just as popular as the rest of Australia - and this presents a wonderful opportunity.'

Because buying in Perth was  cheaper than the east coast, the risk was also lower, Mr Bentley said.  A two-bedroom city fringe unit can be bought for under A$300,000 (HK$1.54 million), far less than in Sydney or Melbourne, and the rental yield was much higher.

Mr Bentley is not the only one who is  bullish on  Perth. Citylife gets inquiries from across  the world, and 70 per cent of these are asking about Perth, 20 per cent about Brisbane and 10 per cent Sydney and Melbourne. 'This is a complete reversal from five years ago,' he said.

Mr Bentley describes himself as an adviser on low-risk Australian property investment. He markets selected new apartments and houses, which can be purchased by Australian citizens and non-citizens alike, and established or used properties, which can only be bought by Australian citizens, including those living overseas.

His  'best buy' in new apartments is Beautfort Central in the Perth city fringe, a complex of one- and two-bedroom apartments where prices start from A$208,000.

The complex has full facilities, including two swimming pools, three spas, a cafe, gym, gardens and security, in designs ranging from 600 square feet to 900 sq ft.

The rental return will be 5 per cent to 6 per cent and Mr Bentley believes there is little risk of a downturn in capital.

By buying off the plan, investors only commit 10 per cent deposit and the balance on completion late next year.

In regard to houses, Mr Bentley recommends buying new, four-bedroom homes under A$500,000. His pick would be prime areas such as  Sterling, within 10 minutes of the CBD, which would be 'very good bets for the future'.

'Because [it]  is close to the city, you can get reasonable rental return of 4 per cent to 5 per cent, and capital growth of 5 per cent to 7 per cent per year could be expected.'

Mr Bentley advises would-be investors to research their finance before they start looking at property. He suggests clients first check the Australian banks in Hong Kong - Commonwealth, National Australia Bank, Westpac, ANZ, or  use a finance broker who can source their loans directly out of Australia at up to 80 per cent of the purchase price.



Perth a quiet achiever in real estate