Inflation and high interest rates have slowed the demand for real estate in many countries. However, the tide appears to be turning, at least in Australia. Real estate investor Dany Girgis, who has 30 properties across Australia and Vanuatu, anticipates a real estate renaissance in the near future, and he’s making sure he and his clients are ready for it.
Australia’s impending real estate boom comes from a confluence of key factors. The most important is the Reserve Bank of Australia’s new rate cut, the first since November 2020. The RBA lowered rates by 25 basis points, bringing the benchmark interest rate to 6%.
That lowered cost of borrowing is almost certain to draw in potential buyers, whether they’re purchasing homes for themselves or as investment properties.
Mr. Girgis says property investors are unlikely to have any issues finding renters. “There’s a high demand — people want to live in Australia,” he explains. “Now that the borders are open, we have people coming from all different countries.” He notes that population growth and property demand are present across virtually every Australian city. However, he points to Queensland as a potential hotspot for investors.
Rate cuts and high demand for property might be powerful incentives, but not everyone is eager to start purchasing investment properties — or even properties for themselves. Many prospective buyers are concerned about the effects of inflation. However, Mr. Girgis has some encouraging news for would-be property owners.
“If you’re borrowing at 6%, and inflation is 7%, the bank is paying you,” he says. “So if you’ve bought a property for $1,000,000, just as a simple figure, if there’s inflation, naturally that property becomes $1,070,000. That’s not even considering the rise in property value — it’s just inflation. The price of everything, the value of everything, goes up.”
“If the bank is only charging 6% interest and inflation is higher, then your asset is increasing in real value, but your loan is not,” he continues. “So inflation is a very good thing for an investor. People don’t see it that way, but that’s the way it works mathematically.”
Even if you’re fully prepared to purchase your first investment property, breaking into the real estate business as an investor can be challenging. Through his new buyer’s agency, Dany Girgis hopes to help aspiring investors grow their property portfolios and achieve significant, reliable returns.
“It’s mainly residential investment,” he says of the new agency. “It’s helping people buy property that will have positive cash flow to allow them to buy more property.”
Mr. Girgis used this strategy to grow his own portfolio, but he also has experience helping others do the same. “I’ve helped several people go from zero to being millionaires,” he says. “It wasn’t that hard.”
Australia’s rate cut is still very new, and its impact on the real estate market remains to be seen. However, with help from Dany Girgis — and a healthy dose of determination — would-be investors might be headed toward a hopeful future.