Overseasinvestors have taken a strong lead as the most consistent and competitive acquirers of Australian office and retail assets, topping out at about $13 billion in the year to June, according to new figures.
The latest asset that is said to be favoured by Asian buyers, is at 4 Bligh Street, Sydney, among many others.
According to Savills, Australian office sales totalled $12.8 billion in the 12 months to June 2014 of which foreign investors accounted for 39 per cent of the stock sold, worth about $5 billion.
Some of these properties, including 570 George Street, which was snapped up by Singaporean investors, and is expected to be converted into apartments.
Savills national head of research, Tony Crabb, said that during the same period 246 properties were sold, up from the previous year of 199, and up on the five year average of 191.
‘‘The capital that has been coming in strongly from Europe and South East Asia since the GFC, is now competing significantly with institutional and private capital from mainland China along with strong competition from the domestic market,’’ Mr Crabb said.
Overseas investors accounted for 39 per cent of the deals, with local super funds at 32 per cent and the rest spread between real estate investment trusts and private syndicates and developers.
CBRE’s head of research for Asia Pacific, Dr Henry Chin, said the company's recent survey of 600 global investors had also highlighted an increasing appetite for real estate investment in 2014.
Dr Chin said Sydney was the the top of the list for global investors targeting the APAC region, with Melbourne coming in at fourth position. On a country basis China received top billing with Australia ranked second, as the local market still offered one of the highest yields across the major global markets.
He believes the US will be the first to increase interest rates, with the expectation being that rates would rise by the second half of next year - potentially sooner depending on economic recovery conditions - and would stabilise at four to 4.5 per cent.
‘‘The rise in Asian outbound investment and the potential for an influx of investment from Asian insurance funds, will also impact the market,’’ Dr Chin said.
CBRE data shows that Asian institutions invested $US25 billion in commercial real estate in the US, Europe and the Middle East and Africa and Australia in 2013, a rise of 142 per cent from 2012. Some 15 per cent of that investment was in Australian property, a significant percentage given the size of this market.
‘‘CBRE expected Asian insurers to invest $US75 billion in global real estate in the next five years.’’
But local players are active, with Investa Office buying 6-10 O’Connell Street and REST Super Fund paying $550 million for 52 Martin Place.
Paul Craig and Ben Azar of Savills International Investments said domestic demand was still high for Australian CBD investment assets and development sites.
“This is a very good sign for the Australian property market and as a result in key markets such as Sydney and Melbourne we anticipate further yield compression, particularly in respect to quality long leased landmark assets,” Mr Azar said.
“With such a depth of buying power, we expect the off-shore capital to become even more competitive over the balance of 2014’’.
