Australia could soon emerge as a major international market for UAE and Saudi Arabia-based real estate companies and investors, with leading sector players from the country wooing investments and partners from the Middle East, offering significantly high returns and long-term growth potentials.
Leading Australian real estate companies such as Versatile Group will be holding roadshows and closed-door meetings this week with several family offices, funds and ultra-high net worth individuals (UHNWIs), besides some of the leading developers in Saudi Arabia and the UAE, which are expected to lead to a slew of investment and partnership deals getting wrapped up over the next few weeks and months.
A surge in population growth – projected to add 10 million over the next 10-15 years – propelling leading cities such as Sydney, Melbourne and Brisbane as major employment centres, coupled with the boom expected in the runup to the 2032 Olympic Games in Brisbane are touted as the major drivers for growth in the real estate market in the country.
The rising supply shortage in Australia’s housing market in the wake of large-scale insolvency filings by construction companies and third-party developers, hit badly during the pandemic period due to lump sum contract deals, is another factor highlighted as a major opportunity for investors and developers from the UAE and Saudi Arabia to cash in on.
“We believe the Middle East can play a key role in solving the housing supply crisis in Australia.
“It is why we are holding meetings with potential investors this week who have shown a significant interest in exploring this opportunity which provides a strong return on investment,” Marco Fahd, Group Chairman and CEO of the Versatile Group, told Arabian Business.
Fabrizio Perilli, Group Managing Director of the Versatile Group, said that for investors from the region, the mid to high-end market represents a compelling opportunity.
“Not only does it offer strong capital appreciation potential, but it also provides a level of stability and resilience, even in fluctuating economic conditions,” Perilli told Arabian Business.
Both Fahd and Perilli said as demand in this segment continues to grow, investing in mid to high-end residential developments can yield significant returns, particularly in key markets where the desire for quality properties remains robust.
Housing market challenges and opportunities
The Versatile Group Chairman and CEO said Australia’s real estate market is currently navigating a perfect storm, characterised by a severe housing supply shortage, compounded by a construction industry struggling with the aftermath of the Covid-19 pandemic.
“But within this challenging environment lies a significant opportunity for investors,” he said.
The pandemic had catastrophic effects on many existing players in the industry, disrupting supply chains and causing major labour shortages, leading to huge cost increases, with contractors caught in fixed lump sum contracts between 2019 and 2023.
Fahd, citing data from the Australian Securities and Investments Commission (ASIC), said the significant losses has resulted in over 2,800 construction industry insolvency appointments for the 2024 financial year, until June 16.
Perilli said that traditionally, Australia has had investments from the US, the UK, European and Asian nations, but hasn’t been on the Middle East’s radar.
“We think that whilst the Middle East has focused on investing in the US, UK, and Europe in the past, the strong growth prospects in Australia are similar to these other markets and offer great opportunities for investors in the region,” he said.
Versatile Group’s presence in the Middle East
The top executive of Versatile Group, which has extensive experience in the Middle East region – it is engaged in several high-profile projects, including the prestigious Diriyah Gate development in Saudi Arabia – said with extensive global portfolios and keen interest in new growth opportunities, he believed investors in the Middle East, and particularly the UAE and Saudi Arabia, are well placed to understand the upcoming growth in Australia and therefore the corresponding investment opportunities to be presented.
“It is a perfect alignment between solving a strong demand for housing developments and Middle East investors looking for strong returns.”
“We have had a presence in the Middle East for four years and our commitment to the region has been cemented by our chairman’s move to live in the UAE as we develop the immense opportunities here,” Pirelli said.
He said this has helped open the gates for the company between this region and Australia.
“Whilst Asia has always had a major focus on and interest in Australia, it has become evident that apart from the institutional sovereign wealth funds in the Middle East, there is a significant opportunity for Middle East Family Offices and companies to invest in the growing Australian market,” he said.
Australia’s population growth driving housing demand
Australia has a strong population growth forecast for the next ten years – according to the Australian Centre for Population, Australia is projected to see its population grow from 26 million in 2024 to over 36 million in 2041.
Perilli said this will see major cities like Sydney, Melbourne, and Brisbane take the majority of the population growth as primary employment centres.
“Besides, a significant boom [in the property market] is expected over the next few years as Brisbane prepares to host the Olympic Games in 2032,” he said.
Fahd said with the current undersupply of housing in each of these Australian capital cities, the population growth projection is expected to widen the gap between supply and demand even further, making this an even more important time to invest in the country.
“As a result of the recent challenges and the supply-demand gap in the Australian market, for the next three to five years, vertically integrated businesses will be the predominant group delivering on the housing supply and the Versatile Group is one of the few credible parties that stands ready to deliver on this housing supply challenge.,” the Group top executives said.
They said by partnering with the Group, investors and partner companies can work together to help address the critical shortage in Australia’s housing market.
The combination of stable government support, continual rising demand driven by population growth, and limited competition makes this an ideal moment to invest in Australia’s housing market, they said.
“We’re here to partner with the right long-term investor partners – we’re choosing to be selective when looking at potential partners, to ensure we’re fostering long-lasting and impactful partnerships.
“Our existing partnership with Mitsubishi Estate Australia has pioneered the way for us to explore further opportunities in the Middle East, and we look forward to working with partners with a similar mindset to support the industry in Australia,” Pirelli said.
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