Transcript here - Expat Advisors Community

The Sumo Group of Companies
Economic History
• Pre and Post GFC
• Glass-Steagall Act Repealed in 1999
• Banks Too Big to Fail – Governments Step In
• Sovereign Debt Crises – Reserve Banks to the Rescue
Key Issues for Key Economies
• Europe – Uniform Currency but Political Diversity
• USA – Huge disparity between Public and Private
• Japan – Aging Population and Deflation
• India and Asia – Living Conditions
How does the Macro Economy
Interact with Personal Wealth
Gain ?
Golden Principles of the Past Macro
Environment Now Challenged
 Buy and Hold is a Safe way to Invest vs Affordability
 Share markets Always Outperform – Is this True with
Monetary Printing ?
 If its all too Uncertain, keep cash in the Bank !!
Is there a New Paradigm ?
These are Unprecented
Economic Times !!
Relative debt positions
Sustainability of Debt - USA
• US Tax Revenue - $2,170,000,000,000
• Federal Budget - $3,820,000,000,000
• New Debt
• National Debt
• Budget Cuts
- $1,650,000,000,000
- $14,271,000,000,000
- $38,500,000,000
OPTIONS : Raise Taxes, Lower
Government Spending or Borrow more ?
Let’s Assess the Facts
• Have All the Economic Bullets Been Fired ?
• Too much Capital chasing Too Little Yield
• Changing of the Guard – The Risk
• Which Country is Most Likely to be Left Still Standing ?
AUSTRALIA
Australia’s international standing
Organisation for
Economic Cooperation and
Development
(OECD)
Better Life Index
2012
Australia’s Economic Position
• 12th largest national economy by GDP (US$1.57 trillion)
• 8th largest Stock Exchange in the World
• Global trading valued at $627 billion (Financial Year)
• The Test of Time ?
Australia’s Track Record
• 1987 Stock Market Crash
• 1997 ASIAN Currency Crises
• 2007 Global Financial Crises
KNOWLEDGE TEST
• Which Country is the biggest Investor in Australia
and Why ?
• Which Country had the 2nd best Performing Stock
Market in the World over 100 Years ?
• Why has the Australian Economy been Growing
Consistantly ?
Where do we Start to Build
Wealth in the New Economic
World?
Where Money Printing Ends
Up – On Real Assets, in the
Safest Economic Geography !
What About Property ?
Sydney Morning
Herald
ANZ tie-up looks to boost Chinese
investment in Australia
The Australian-18 hours ago
“This will not only support the growing two-way trade
and investment relationship between Australia/New
Zealand and China, but will also help .
Source: Residex
AUSTRALIAN PROPERTY
There are a range of important factors that point the overseas buyer to invest in
Australian residential real estate.
 Stable and transparent government
 Provision of optimum yielding prime grade assets.
 Strong economic performance –GDP growth.
 Well maintained and improving infrastructure.
 A skilled and educated work force.
 Australian Government encouragement to offshore buyers.
 Compares highly against other Asian property markets.
Is Property a Good Investment ?
• AFFORDABILITY higher NOW despite higher Prices
• Government Incentives – Tax and 1st Home Buyers
• Ratio between Supply and Demand
• Restricted Finance to developers
Major Cities
Sydney
New South Wales
SUMO AUSTIN GLOBAL
WEALTH
Brisbane
Queensland
Melbourne
Victoria
Gold Coast
Queensland
Where does one start to Find
Opportunities in Australia ?
INVESTING IN
AUSTRALIA
Some Key Financial Facts…
Key Facts
CHINA
AUSTRALIA
Borrowing Rate
5.65%
4.5%
Rental Yield
Borrowing
Rate
2.6%
5%
Rental Vacancy Rate
22.4%**
1.4% (Sydney)*
Source: * http://www.yourmortgage.com.au/article/rental-yields-in-sydney-set-to-rise-as-vacancy-rates-plunge-78808.aspx
Source:** http://www.chinanews.com/gn/2014/06-10/6265850.shtml
Key Facts Continued
CHINA
AUSTRALIA
Land Use Right
70 YEARS
99 YEARS (Apartment)
Freehold land no time restriction
If You Invest Under Construction
(“Off the Plan”)
30% and repayment starts after contract is
signed
You pay only 10% now
90% on Possession(“completion”)
10% is held in Escrow (“in trust”)
Source: http://www.chinasmack.com/2013/stories/chinese-land-use-rights-what-happens-after-70-years.html
Source: http://www.ausproperty.cn/instruction/61971.html
Source: http://mt.sohu.com/20141223/n407219454.shtml
Key Facts Continued
CHINA
AUSTRALIA
Property Growth Rates* (2015)
Average was higher than Sydney, while it is
declining
Sydney 6 %
Loan/ RMB
Repayment
Method
AUD
Exchange
Rate
Interest + Principle
Interest Only
AUD / RMB Exchange Rate
RMB 4.6= 1AUD(was
6.7)
BEST TIME TO INVEST!
*Source: http://www.globalpropertyguide.com/real-estate-house-prices/I
Source: http://www.boc.cn/sourcedb/whpj/enindex.html
Source: http://www.zhihu.com/question/27310210/answer/36091343
Typical Property Investment
Investment Property Value
Your Investment
- 10 % on contract
- 10 % on settlement
Other Costs
- Stamp Duty + legal + accounting(around) *
$750,000
$75,000
$75,000
$35,000
Total
$185,000
Property Value grows by @ 6 % of $750,000
Year 1 ($795,000 – $750,000)
Year 2 ($842,700 - $750,000)
Year 3 ……
*Stamp duty varies from State to State
$ 45,000
$ 92,700
=RMB 426,420
……
Loans can be “Interest Only”
Value $1,343,234
Value $750,000
Loan
$600,000
1 2 3 4 5 6 7 8 9 10 Years
The longer you hold the property, the more value you received
How to Manage the Mortgage?
Income / Expense Working
Income
Rent Received Monthly ( @ 5 % of Value )
$3,125
Expenses
Interest on Loan ( @ 5 % of Loan )
Other expenses*
Total Expenses
$2,500
$529
------------------$3,029
===========
This means you do not need to worry about the loan as the rental can
almost cover the mortgage as Australia has lower Rental Vacancy
Rate.
* This rate is based on average Water, council ,strata and agent service fees, they may vary from case to
case.
What we can do for you ?
1. Selection of appropriate property for you
2. Legal – assist you in conveyance of the property
3. Arrange for the Bank finance (Loan)
a. Property Management
b. Finding the tenant
c. Managing property
d. Collecting rent
5. Accounting services
6. Cross border tax advise
7. Assist in selling your property