CEO Interviews

The interview: The Property Expert International’s Robert Klaric on Sydney’s prestige real estate growth and global appeal

Robert Klaric, founder and CEO of The Property Expert International, talks through how Sydney’s prestige real estate market remains a safe haven for global investors, the resilience of high-end properties despite rising interest rates and the growing trend of Australians investing in Southeast Asia.

Boulevard: What makes Sydney’s prestige real estate market so attractive to international buyers, and how has it continued to grow despite predictions of a market bubble?

Robert Klaric: Sydney’s become the Switzerland of the South Pacific. The reality is, it’s all the top end of town– it’s a safe investment. With all everything that is happening across the world– whether it’s in the Middle East or in Europe– no matter what’s going on, Sydney’s now become a safe haven and a lifestyle choice for a lot of the ultra-rich. So the top and prestige end of the market has seen such growth because of those reasons.

We’re seeing the influx of people coming out of Asia and Europe, as well as America, seeing Australia as being a safe destination– not only that to raise a family but also there’s access to education and there are no borders. So being a protected sovereign island is fantastic.

“Sydney’s now become a safe haven and a lifestyle choice for a lot of the ultra-rich.”

The value of real estate has gone exceptionally well. We’re looking at suburbs like Point Piper, Mossman, and even the beach suburbs of Manly and Bondi have seen an increase of 50 per cent in terms of its value, over the last five years ever since the pandemic. Everyone thought it would be a bit of a bubble, and they’ll come back– well, not really. And I guess it’s the old attitude of anything that’s valuable and if it’s prestigious and rare, it makes it even more expensive– like the beachfronts or waterfronts in Sydney, or properties with harbour views. It’s like a signature watch or piece of jewelry, art, diamonds or gold– there’s only a small amount available, and with that, it’s supply and demand.

Sydney has a strong demand for its prestige real estate, as well as the limit of the supply. God’s not making any more waterfront blocks of land in Sydney for sale within 20 minutes of the city or whether it’s the eastern suburbs, Mosman or North Shore. We’ve now seen real estate come of age in Australia, and the capitals of them are the major cities– like Sydney and Melbourne– are the signatures of Australian real estate.

Blvd: Sydney at the moment has a huge supply of apartments, and not cheap apartments. What is your thought in that space?

Klaric: I think Australia, especially Sydney and Melbourne, have pioneered the luxury prestige apartment market now, and I think that’s been driven by the demand from Asia. A lot of high-net-worth Chinese and Singaporeans, they’ve come to Australia looking to not replicate, “I wanna buy a home, but I’d like to have an apartment of a prestige nature– bigger in its size, bigger in its views,” and basically a showcase. They’ve been used to that in the Asian market, but the Australian market has taken a while to accept that, and it has just blossomed in the last five to seven years. We’ve really seen our development in Sydney and Melbourne really cater to the exceptionally wealthy market. I see it personally with my own clients and I’ve seen it with high-net-worth clients that are coming back from Asia or Europe and the States. They’re happy with an apartment. In actual fact, they prefer turnkey apartments. They’re here because it gives them all the amenities and it’s close to everything they like.

Blvd: With rising interest rates, have you seen the 10 to 15 million market for prestige properties in Sydney and Melbourne being significantly impacted?

Klaric: Not really. The reality is, while interest rates do impact the broader market, particularly for first-time homebuyers or the general middle market in Australia, the ultra-high-net-worth individuals and the prestige market aren’t as influenced by interest rates, whether they’re at five per cent or seven per cent. What’s driving purchasing decisions now is the product itself, and this comes back to supply and demand. Demand for prestige properties in Sydney and Melbourne remains strong, but the supply is limited. It’s a small, expensive market where developers are paying top dollar for land and construction costs have skyrocketed in recent years, increasing by 30%. As a result, prices for these high-end properties have risen as well.

Blvd: We’re seeing an influx of wealthy buyers from Singapore, New Zealand, the US, and other regions. Given this, do you think the marketing strategy for agents needs to shift, focusing more on the property itself rather than the agent? What are your thoughts on the sales process at the high end?

Klaric: I think there’s a real sense of educating our markets now. In the past, if you interviewed someone coming out of Asia or Europe and asked them, ’What do you know?’ they’d tell you Point Piper, Vaucluse, Mosman, Hunters Hill, Bondi, or Manly Beach. They knew the top four to five suburbs. The super-wealthy Asian market that came here had limited choices in their own mind because that’s all they knew. But the market has become a little more educated now.

“While interest rates do impact the broader market, particularly for first-time homebuyers or the general middle market in Australia, the ultra-high-net-worth individuals and the prestige market aren’t as influenced by interest rates.”

I think they’ve really discovered that there are amazing pockets within Mosman they may not have known before. They all know about Balmoral Beach, but not everyone knows about Chinamans Beach. They might not have heard about The Spit, which has some of the best restaurants in Sydney. Places like Birch Point, Palm Beach, Duffy’s Forest, Terry Hills, Woolwich, and even Woolwich Pier have now come to light. Suburbs like Balmain, an older area in Sydney, have also gained attention. It’s been a gradual process—people have needed to buy and move in, then discover these places themselves. Once they’ve discovered them, they share their findings with their friends, and it has organically grown. As you mentioned, agents need to become more sophisticated and educated to realise there’s more to Sydney than just five key suburbs for investment.

Blvd: Where do you see the market heading over the next 12 to 24 months?

Klaric: The reality is, I’ve been doing this for 35 years and have seen every market boom, bust, recession, market collapse, the global financial crisis in 2008, and the pandemic. I’ve experienced all of these. Now, as we head into 2024, the world is at a precipice. We have uncertainty in Europe with the Ukraine-Russia war, instability in the Middle East, and a new government in the United States.

Change is inevitable, but change doesn’t always mean the markets will go up– it could mean they go down. However, markets will find their feet. When you look at Australia, especially Sydney and Melbourne, they are the heartbeat of the nation’s financial markets. Over the next 12 months, there may be slight adjustments, but long-term, the market remains strong. People still want to live in Sydney and Melbourne because of the lifestyle, work opportunities, schools, and the infrastructure. Sydney’s new metro system, for example, has revitalised certain suburbs that were already good but are now even more desirable.

So, to answer your question, I think the market will continue to bump along over the next 12 months. We likely won’t see the massive growth we’ve seen in previous years, but Sydney and Melbourne are recession-proof cities. Even if the broader market faces a downturn, demand will remain strong, particularly in the prestige segments of these markets.

“When you look at Australia, especially Sydney and Melbourne, they are the heartbeat of the nation’s financial markets. Over the next 12 months, there may be slight adjustments, but long-term, the market remains strong.”

Blvd: Are you seeing more Australians looking to invest in Singapore and Southeast Asia? It seems like many are spreading their assets across the region, with places like Bali gaining popularity. With finance doing well and more people working from home, are Australians increasingly looking to invest from anywhere?

Klaric: Yeah. I think there’s a real lifestyle investment and we’ve seen a shift to it in the last few years. Ever since the pandemic, people have been able to say, “I’m gonna work from home.” So they’re picking destinations, like Thailand, in Phuket. I’ve got clients there,and they’ve made the decision to move there– and they’re loving it. Obviously, every nation has a different set of rules, so I’m not suggesting people to just pick up and buy in their favorite destination. They need to do that homework, have great lawyers and a great understanding of the property markets overseas before they actually invest in it.

Places like Bali have certainly gained in popularity, and other nations in Asia, like Malaysia, are also encouraging investment. There are some beautiful areas across the region. However, as with any investment, people tend to invest in what they know and are cautious about investing in unfamiliar markets. That’s the key takeaway I’d share with many clients.

“I’m not suggesting people to just pick up and buy in their favorite destination. They need to do that homework, have great lawyers and a great understanding of the property markets overseas before they actually invest in it.”

I’ve got clients that wanna go to Italy, and it’s wonderful. The idea of buying something in Tuscany and having the best food and wine in the world, or even in France, is a great idea. However, there are many tax considerations and restrictions to keep in mind. These include taxes in both countries and limits on how long you can live there. So before you launch into a lifestyle investment, you really have to make sure that you have your ducks in a row and you’ve done all your homework.

Read next:

— Latest listings —